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发表于 2011-9-17 13:16
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Current situation
. P& M5 c% H+ ?3 g- L The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
6 J' T% K) X1 w+ d6 L" Was funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, k* D# G; O& @9 A; j. x# Mimpose liquidation values.
& u8 D0 k: |- Q& a+ b; i# \( Z In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In) ^2 u! J( X3 }' Q5 E
August, we said a credit shutdown was unlikely – we continue to hold that view.1 B2 R% q" o; {8 m1 ]+ e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension& z7 M8 `+ M X" x, ^3 \
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
* D8 @: A. c2 z' B# t( P1 z4 Z6 u Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in. N7 g: d- [/ c# n
September. Non-financial investment grade is the new safe haven.
0 X; w$ d7 N& Q7 n' l High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%4 Q' J/ G& {* |4 ]2 i
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1; i/ O. j0 T9 P, M+ ?
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have% p/ j8 y3 R+ z" Z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 G* K! P6 Z$ K% v1 A# {" ICCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are5 x% e& I. P3 c3 @# \
positive for the year-do-date, including high yield.) J. D: O/ K& G3 ~! x
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble4 O6 P- D3 i0 }$ I- J5 _
finding financing.
+ v5 U" P& A- F, Q0 v9 I3 F Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they+ X6 ~+ a# v- y( f8 }
were subsequently repriced and placed. In the fall, there will be more deals.2 c, \5 G D7 e% u
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
6 d# k8 h! C0 T. N7 b9 v! uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were- R9 M2 d6 ~) N- g
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for! r( s. g( N% @; H* y9 H2 {$ n- P
bankruptcy, they already have debt financing in place.
3 ]3 `" l' X+ P* E+ }7 F9 V European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
6 k0 ^% O7 S7 rtoday.' t/ M- i8 L' ~8 H) K5 R$ b7 }) \
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in8 i4 s; x) @6 \' o
emerging markets have no problem with funding. |
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