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发表于 2011-9-17 13:16
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Current situation5 h* n( j; _# i2 u7 n" P& M8 y& g
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
+ S1 N W- @& K! J: _as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! g/ i1 a2 C8 L- ], c' f" V! Iimpose liquidation values.) Y, N) ` h" l8 b5 |( P
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) Q4 P4 w) w1 F1 R& h& a7 C* }" yAugust, we said a credit shutdown was unlikely – we continue to hold that view.
7 ]) I. Z# V4 A% a% C- J# ~8 d) l The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension: x4 ~1 m9 K$ k& a. b. i
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets./ C, Q5 R; X) C# X( h* F
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A look at credit markets
/ p/ m; y8 Z" e; w Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 V/ D5 d2 K8 _. VSeptember. Non-financial investment grade is the new safe haven.$ W; C j! g; G }
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
5 {. k* S2 C! w5 h0 i7 A& L3 A2 p! qthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 o6 g" {( q8 }billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- m1 y6 }# l: y' \6 F; g0 T2 J
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade4 ?. C2 t5 [& r( |1 ^" p. j* W# F
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
! E' g2 G/ Z$ y4 @& \positive for the year-do-date, including high yield.
4 I% g, }5 Q) h9 ]9 ]- q4 l Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ b$ L4 m4 E! w& E2 D; \5 Z) T# E
finding financing.' ?7 @% m- n8 e- K( k. G
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they: @. H( b5 R: o C1 E/ w
were subsequently repriced and placed. In the fall, there will be more deals.
) k6 Y0 ]* W3 i& {- S4 z+ _! a Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
7 b! c, o! C2 P5 J6 G/ Vis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were! M, S, t2 A) d3 G* k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for- _4 r3 S0 H" E% B8 ~0 n% j
bankruptcy, they already have debt financing in place.
7 Z8 ?7 A: ^) A1 V0 u European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain5 ~( w: m% L9 g8 B
today.8 s5 ?0 i8 m: I/ [* k
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 z! n9 b' d- k. r, s$ r5 W# {emerging markets have no problem with funding. |
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