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发表于 2011-9-17 13:16
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Current situation
7 s3 G' `* I) b3 i' v The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: U- b9 a2 r: L7 ?3 Z
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 X8 ^4 s/ g! R' k) Limpose liquidation values.
* \3 G/ n6 N5 {7 f$ q* g# M In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In/ e' R1 I& o- K/ D; v2 T3 v
August, we said a credit shutdown was unlikely – we continue to hold that view.. h/ u8 F& M8 w$ B0 ^
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 q6 K3 K# A0 a! Gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* X" M Y: p+ u5 Y! q6 Z7 N. O
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A look at credit markets
: y$ T0 d/ ?' E! K1 a( y" g Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in/ j+ ^* E) n& _& B* Z" O
September. Non-financial investment grade is the new safe haven.! x$ H: o3 e: C
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
8 n& L0 F9 e& [) t7 D1 athen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
2 j2 g5 `! u; n) d0 g- ]billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
: p4 Y" J7 t) q; `2 R# a/ raccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade8 M5 a$ M: w' r* b
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
1 L: ^+ G8 ^: ?/ N8 N! f% Spositive for the year-do-date, including high yield.4 h1 w8 u, ~ p, _5 p Z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble/ Y9 K" F% T4 ~* i# F
finding financing.
. @9 o3 c0 V7 \! }; Z: w1 A Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
" Q u( k- X: t8 `4 Q9 t2 awere subsequently repriced and placed. In the fall, there will be more deals.
- L; M: E. }" N) B) A3 Y0 ~ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and7 j, h+ X/ @) g* j, k
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 v6 c# n* K( S" c& w
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for( {2 A3 R- h$ |) \0 P
bankruptcy, they already have debt financing in place.1 z( J5 G8 H0 t7 s% D
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% c8 |' |) x( O- f
today.
+ ]3 X4 f& b+ M2 ~! p Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 e* @" O8 W* O* @7 Z( y7 A5 gemerging markets have no problem with funding. |
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