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发表于 2011-9-17 13:16
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Current situation
8 q2 `$ c7 C! y& a: |4 r The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ Y/ S- J) X9 v5 v0 y3 e3 |4 g% u9 ]6 f2 _as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
( U) I7 g1 o' V. b7 limpose liquidation values.
( v0 K2 M: K6 t2 ^) ~ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In' j' f) _+ a* \% r- p7 n
August, we said a credit shutdown was unlikely – we continue to hold that view.
( y5 v# T2 O, k6 b: r The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 M% l6 P- I. V! C8 Gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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2 s" k$ ?0 v1 TA look at credit markets
( n+ o, M: h) V Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
/ ^2 _' @. L9 j$ [4 b. N+ iSeptember. Non-financial investment grade is the new safe haven.
9 H* |$ }5 Z, W- G- ?0 A+ U High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
7 ]( x& `) |' ~% Sthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1- J( `) i) F8 A9 _3 w
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
0 a: ]. p8 Z, O5 J8 v! aaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- w# R( P, b- `CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are9 i w. o/ h* M. h+ @4 I8 M' C; V
positive for the year-do-date, including high yield.% B3 e: E0 c! }" S2 V* z% f5 w6 i/ v
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 ]( } ^$ k, v% i3 Cfinding financing.
/ A& S; X3 ?' |# Q, _ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
* f; L! p9 T$ t2 V7 B9 V4 Z; Kwere subsequently repriced and placed. In the fall, there will be more deals.
" V3 X) r4 W& ^. k( s9 {: @ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
' h0 H; f: m' z5 h9 vis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
3 M7 t8 w8 k* E6 t7 f, x9 igoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
0 {/ t" S9 N% A. m- nbankruptcy, they already have debt financing in place.7 o* @& z1 H: ^. y3 h
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
6 m, O4 m* v7 ?today.
; e- p& D# ]0 ~1 J+ a [% o9 g: L Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- V- F* M! O; ?) |) g( }) K
emerging markets have no problem with funding. |
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