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发表于 2011-9-17 13:16
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Current situation, e' |0 I8 c3 o
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
2 Q- K# j, z. _' sas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may9 j4 p+ A0 N: \- A. d
impose liquidation values.
& Q) u. T$ c: X: A( d+ j In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In, [0 v5 v/ \6 u; V
August, we said a credit shutdown was unlikely – we continue to hold that view.
' z5 e5 z3 O8 j* H The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
: ]$ c- A* f7 B1 d6 dscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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: e. d4 @# D2 ]' I/ j- X! Z7 w$ FA look at credit markets# o# W6 t6 U5 F
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in2 `3 j, B/ i& T/ w2 V5 L# J- e
September. Non-financial investment grade is the new safe haven.
- P/ W: N( w. m3 v$ A High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%# q" A9 t2 n9 d/ M' t
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
& |; x, K) i' F6 K T. Fbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have3 e" T: M7 j" }8 n. f
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade( ~, L3 I0 l3 K7 C% u4 `
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are7 x# [9 p, _4 M5 j) G
positive for the year-do-date, including high yield.5 o1 t3 E. j* G/ P
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; u; f1 _) g/ s% I E. u
finding financing.) J. T9 B2 x1 Q7 K, N
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they5 A' O5 n2 E$ s( @8 G5 X+ g" z; v
were subsequently repriced and placed. In the fall, there will be more deals.) J) `4 u" V' `
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* f- _6 e5 q3 R, L* fis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were, D; x$ j$ g, i1 b
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for, B! Q0 B; D" w& d: v1 i; P
bankruptcy, they already have debt financing in place. M# o9 z u) e( K
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 K4 f7 ~1 U% V# }. H8 \
today.2 a- u3 r4 l0 u
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in( E: |" r4 B6 E6 k% I7 L
emerging markets have no problem with funding. |
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