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发表于 2011-9-17 13:16
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Current situation
# g& l9 P! Z( ?" `- ] The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
0 I) E5 `1 \1 {& C, Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may, f. D. a6 i8 @( C: l
impose liquidation values.
+ ]+ x" G+ v, t2 c$ \ Q! W6 n; N In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
' O) d! o3 a8 H3 X) Y( pAugust, we said a credit shutdown was unlikely – we continue to hold that view.9 C: r/ @$ m, g) }
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' p7 f" h; | X# O8 s- P
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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( `( ?) |; S" \3 K% l3 LA look at credit markets
# J7 g2 |* S4 c! J# W7 Z; ? Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
1 q3 X4 ?* ]. h) o2 L- zSeptember. Non-financial investment grade is the new safe haven.( ^& [7 h* T& _4 [2 `4 |2 U+ k
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
* t* b( n8 i( t2 G1 R2 _: l2 j. Q! ~then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
# [4 L4 P" Q, e! k {billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 n) {2 z5 A5 m3 W6 a( U% O; Laccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
+ X+ |/ L6 k$ L4 {7 ] ~* D* g6 ~CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
1 R3 \9 |! e; w- S9 Y% Opositive for the year-do-date, including high yield.
" Z+ H& r3 ^& u! f* i8 } Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
" `4 h9 I2 l* Z; | Gfinding financing.$ H9 ] c& Y4 @2 F/ |1 l
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
" k+ c) @( ]9 H: Nwere subsequently repriced and placed. In the fall, there will be more deals.
+ D; Y) Y: |6 a" r$ z' u Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
/ _& b* v N0 uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were, j5 d5 u8 ` O- ^) y& G
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
6 i4 V8 K; V* p' {- j" obankruptcy, they already have debt financing in place.; R$ ]9 Z3 Z/ D x5 t; q7 v8 o
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
: L8 ~9 V) z* k$ M" q* |2 Q& Ztoday.
! E8 Z: V6 B) ]5 I- Y/ r( D Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ @6 _: X/ x2 o& o! |. b
emerging markets have no problem with funding. |
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