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发表于 2011-9-17 13:16
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Current situation0 C0 i# Q6 r4 [1 W/ ]. e
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
S( }* V a8 X3 jas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may' u3 j3 I: q b9 Z
impose liquidation values.
/ b; m9 k3 ]5 d! S- A In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
0 ?7 Y" F& L$ p* x9 uAugust, we said a credit shutdown was unlikely – we continue to hold that view.
4 b" x" ~* Z8 h( d& ]/ V( m& T The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension9 ^3 W. t/ b7 `
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.7 H' q+ @' N5 z# ]0 K9 W
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A look at credit markets
# `) p8 o' q, L* q% ^ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in) q( q' u8 i+ V" ~1 J8 M
September. Non-financial investment grade is the new safe haven.
* K" B' d. ^$ I0 \2 M S3 w9 \ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
1 i7 V: t, ]1 e1 C2 l5 M8 uthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1! V, N# @3 Z" {1 q$ Z
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' @8 }$ ]$ W: O; t2 X' paccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade R/ P' m5 z# M6 ]! s8 |
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are- C o8 n- `3 E& A' o% i
positive for the year-do-date, including high yield., n6 U$ S0 y6 S/ H( Y2 P
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
8 v' r5 ~ }4 K) Xfinding financing.
; u; T. c3 N4 Q. F Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
; i$ @( K& O3 {3 wwere subsequently repriced and placed. In the fall, there will be more deals.
) L2 c" r7 B7 X Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and) _1 R. W: I) t9 L- ^1 j t
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were6 v5 X& r8 A+ K, F
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
: _& P1 E+ f2 B: |! q; abankruptcy, they already have debt financing in place.. _* V1 A& ?+ M% O$ I3 \3 p
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
2 ^# r1 A; D& A7 i" oemerging markets have no problem with funding. |
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