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发表于 2011-9-17 13:16
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Current situation
5 o# P3 b; Q! k; f The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
- `! v2 v0 i( h6 jas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may7 ?, }6 p4 B- n, c, q
impose liquidation values.+ p) `9 [) k5 l" [3 U8 c
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In4 `4 j* n+ e/ D4 o' _! |% V9 S
August, we said a credit shutdown was unlikely – we continue to hold that view.: P) d0 e. { G& P
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
& b0 w% d& X; P/ t8 qscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.) Z/ a7 R% E& W& S/ N+ d! |* o
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A look at credit markets
% e, a3 {% z. B) V; O Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- a8 [# T/ R. @7 w3 ~) {1 [September. Non-financial investment grade is the new safe haven.6 Z/ b3 L4 L; ?% e* l
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 m9 u t- ]( G
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1& }4 N) P& l; O: ]2 Y
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have3 }0 e8 v# q1 S# m; \. Z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade/ Z+ Y$ z3 w6 `, f0 A# X
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# G. U- g$ Q: w2 m7 s( ]
positive for the year-do-date, including high yield.( N- D7 }8 A+ w2 B$ }% Q% u( [% {3 \
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
! S! J' S( R: w! e: ofinding financing.
, o( N; C( u$ I4 t Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
, C% f# Q( h. M3 hwere subsequently repriced and placed. In the fall, there will be more deals.3 B4 v9 I5 b) S5 }3 d& P% A
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and; I& g: i+ E4 ^9 ?( }$ J
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 e: l" D+ l7 g6 C p) A {9 y8 d! k$ U
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
7 _, ^6 d0 F- p2 ?2 Kbankruptcy, they already have debt financing in place.$ Z0 V7 u2 ]" L: q3 q" h1 B S, I
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain+ z; C& J$ ~& Y3 }
today.
$ o6 V7 e6 R r# f9 ?3 A" x0 ~! L Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in7 {8 D, a0 p1 h7 b+ a3 K. c
emerging markets have no problem with funding. |
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