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发表于 2011-9-17 13:16
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Current situation
/ k: }( A: m4 X! w2 j6 \ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long+ m) B1 F/ Z& q$ B, k
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
' U L( c% R1 N& gimpose liquidation values.
9 V: |8 M! T' z% l$ R# x In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
, _- s, \" g, ^3 WAugust, we said a credit shutdown was unlikely – we continue to hold that view.1 N* I- L- w0 @- O* ]
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ i5 F% o6 ]7 z2 f0 nscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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* V0 q/ S) c) U! Q- |A look at credit markets& t+ n: }) ]) e( J3 d2 K; L L
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in' E6 l# P: K& M! G
September. Non-financial investment grade is the new safe haven.
0 I: V+ } |+ x% n High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 l( }) y. D- H3 |% j3 B
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
+ Q* Z7 z( e* L9 F3 F8 i# Z8 X7 b2 obillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have& O7 s! L& O+ {) }( U
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade9 N. Q8 X! Y9 f3 G/ f, }6 x
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are$ K* s1 `8 `/ F6 s/ j
positive for the year-do-date, including high yield.; I, d6 }: m' U" Q2 d6 Q6 @7 A0 u
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
- T q; j! N S+ }5 z% Mfinding financing.
4 s- ]" L2 U0 T9 @ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 |! @7 m C# o& `
were subsequently repriced and placed. In the fall, there will be more deals.3 Z$ f/ v# p4 p' \
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and/ P/ l& D# \' F- t) h) X4 S0 ^3 `% h
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were: o4 I/ J& I2 d6 Y% }6 \ i/ |
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
3 O1 A: e& I5 ?. U0 [7 s& `bankruptcy, they already have debt financing in place.
; l7 v% z. K' e6 q% r European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain8 J& r; e7 p0 u/ b+ T" f; p: R
today.: b7 X: Y6 B% ^& `. `; ]
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in2 f* ^, V: w8 _ @
emerging markets have no problem with funding. |
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