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发表于 2011-9-17 13:16
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Current situation
2 z; A4 V3 C- ]' p2 i( s" I5 r1 B The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
! `5 g- M$ Y/ P% N: {9 V" i- yas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
+ r6 D9 G' y- A. c2 gimpose liquidation values.
: L m" _! ]6 p8 U' c' ?& | In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In( ^( P0 ?) U; {+ f
August, we said a credit shutdown was unlikely – we continue to hold that view.
; r' c8 s- l" P9 v+ D0 d The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
: N% Y$ j! P! G- q7 Y: R7 a9 iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
. ]9 T$ U7 }0 N! U1 {2 [$ c& l. ^- o. V+ G8 F/ b5 D+ B) S
A look at credit markets. P' @; t* |; \( `3 o
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in9 `; Y: z2 p3 |- H n D% `
September. Non-financial investment grade is the new safe haven.* E3 ^1 \9 q" D
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
: K# d7 `$ I3 \4 Q! q) Wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; a! B7 A# t) { P Ybillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 V" u) e& |4 I& V' Naccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
6 \5 J( _- i4 [- H' L* u6 cCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
. N/ P; ]* j! i1 v+ O; D! Upositive for the year-do-date, including high yield.
* R' u$ G* ] u+ y/ p; N Mortgages – There is no funding for new construction, but existing quality properties are having no trouble9 ~. y, u r- V" |( N
finding financing.
# f7 U, V0 s8 v" Q Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
# A3 v" _! L# R: J# zwere subsequently repriced and placed. In the fall, there will be more deals.
/ c- B8 F2 b! Y! J Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
6 \1 a" E! [% A; C$ T! m- V3 tis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were6 E# c7 w" O) p& v" P
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for- f q% a. O0 W+ v6 n; L
bankruptcy, they already have debt financing in place.9 ]+ B; ]. d6 R8 j9 J. o' ~7 n
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
3 C1 A8 y6 C+ o7 Y* L9 Y. q; Ktoday.
% p! I0 u9 k4 R; G2 o$ A; _ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
2 h4 ^2 J) p, u( v. zemerging markets have no problem with funding. |
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