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发表于 2011-9-17 13:16
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Current situation; {( ^% ]# f7 ?+ v3 L
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
z# u( |7 N. Xas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may9 V; i i3 p8 U3 ~9 U: n U" v
impose liquidation values.
! k4 C2 o- ?! R; q In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In3 ?# ?9 `0 i' y9 _. K
August, we said a credit shutdown was unlikely – we continue to hold that view.
5 ]5 U% y/ r! f Y, l* h1 B The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 q$ p; ?- j% x5 k: L
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets., G" I M7 p2 Z
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A look at credit markets7 J. s, d p' x. s! E# I% r( C
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
) I; o/ w. A: I# z: i! hSeptember. Non-financial investment grade is the new safe haven.
& Q K) v3 _' m8 d High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%4 k# y' j2 y' Y: G. o" x/ d
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: d0 D. W8 o1 O4 R
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have& l6 H0 D N" g
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade8 y* {% F1 C" j% b$ D
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 u# m7 p! P8 s8 fpositive for the year-do-date, including high yield.
4 p3 _. P% f4 ]+ o9 b Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( J7 c; w2 h& o- i- f: hfinding financing.
7 Q8 N; F7 Y0 _: @5 X w) E3 F Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 ], ~7 c$ E% U; K7 W* B. S3 a
were subsequently repriced and placed. In the fall, there will be more deals.6 m3 c/ w0 u+ S; I! z/ N
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and/ R" z, y7 M. ~, j; E4 f
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 y2 B8 f, ~; t4 g; }* h
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 k, j$ w1 c. v6 D, N& E7 x
bankruptcy, they already have debt financing in place.
- j4 X- E. m" [9 T2 Y European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 n4 X0 P3 C% Wtoday.
P) Q% [. z% m! a. u! C5 P Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
2 S2 i, V1 r! N6 Q5 Eemerging markets have no problem with funding. |
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