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发表于 2011-9-17 13:16
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Current situation
: R \3 T8 q8 Y- a1 c The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long. l, k2 R5 ]- E4 i6 h8 T' x
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may" X; |( B' S# Y
impose liquidation values.
! P. G& w. Q! }) W( W, l" y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In4 c1 z1 H0 I4 u$ Y3 Q
August, we said a credit shutdown was unlikely – we continue to hold that view.
9 @/ ], [; i8 q k9 @ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* F' w0 {& U- Y/ ~
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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- ?' U5 O2 V! a$ cA look at credit markets; v) n: A5 f7 @: x
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in7 h Y* P$ b6 A
September. Non-financial investment grade is the new safe haven.% F4 X! {) E1 e; Q" s3 G, V
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%0 C8 w. ^/ B) ^1 _) y
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ t9 T! a8 N4 T/ @0 l1 qbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have3 F, W2 I$ V8 c% P4 ^
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
# f3 X5 k R& d0 C5 D: R+ e, eCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
1 o% {; E+ O2 X) Z$ p; H4 I6 Lpositive for the year-do-date, including high yield." o5 j1 G9 t8 B+ j' ^: o3 C* |
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 |1 f8 E1 A" Bfinding financing.
5 D* y+ y1 M, u# L' v Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they/ K# N& s) L5 a4 B- {
were subsequently repriced and placed. In the fall, there will be more deals.
+ Y" p* t/ r, h3 Z Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
4 s Y, N9 b4 \ j1 ^, t0 |0 s9 ` M/ uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were$ Q/ _, L! ]6 _5 J O
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for ]9 ^& @3 y" u+ T8 a# e
bankruptcy, they already have debt financing in place.% l/ N: ^+ T/ r# d/ ^0 ~3 C5 v
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain' |0 s" j6 C2 h* }6 l
today.; T( B z1 r) o% ~* ^ M* k% ~6 ~
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: e0 W; _, U) G0 S6 O ]9 s
emerging markets have no problem with funding. |
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