 鲜花( 3)  鸡蛋( 0)
|

楼主 |
发表于 2011-9-17 13:16
|
显示全部楼层
Current situation
4 o! {# P9 G# Y0 E3 |& p6 X The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long( ]: ?; S+ a: T: E" C4 M
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may% e" d" W! l/ A! x
impose liquidation values., @1 C ? ^0 w- y
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# G! `$ b2 D" d& EAugust, we said a credit shutdown was unlikely – we continue to hold that view.
_. F3 `; t/ l$ M& e5 L; M" W. a The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 N0 V; x- {5 ~# c3 x
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
. M( r+ }0 A. c7 T; r. [* P0 S% p$ I
A look at credit markets
: S' _' e! i* Q8 X6 p9 {2 [4 g Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
?% b, w4 `8 l1 i& Z' m# ]September. Non-financial investment grade is the new safe haven.
7 o1 [6 q* v3 B9 I0 K' _8 o, e/ ` m High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' u/ y" S( U; ] I% ~) x1 K, P
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
( C, d, [& a$ }) ^billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
+ ]1 h" ?) M0 ]& Caccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade; h1 M; ^8 E$ Y3 O8 D1 s8 }
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. g7 F& ?, v6 N% y
positive for the year-do-date, including high yield.4 K( o' t% r0 u+ p
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
+ k9 B1 S1 x' P" `7 f- i/ \finding financing.
7 y- v$ a3 k8 B+ f8 ? Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they( w, f8 d o, C) o4 o
were subsequently repriced and placed. In the fall, there will be more deals.7 q. F/ L4 s6 K3 k! n, G
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
. N- a: O' p8 m2 N& His now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were; H5 j* a! l6 s) O
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
8 {. A( }1 f' f/ r$ Xbankruptcy, they already have debt financing in place.
) b* L& O, B( b* O European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
* [1 D4 @2 m+ z9 v [$ Atoday.1 L* Z; H$ |4 S" v; v1 R1 ~: U7 \3 G
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in1 v1 \' t% ?& X; _$ o m9 w0 }
emerging markets have no problem with funding. |
|