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发表于 2011-9-17 13:16
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Current situation
# O8 y2 {4 @0 N' }$ D( x5 w The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 c" N7 T; {4 U6 }: F) S4 uas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may; [ @) b4 j* ?& S# g$ A) q7 w4 J4 G8 h
impose liquidation values.
( n) [( f, e6 z) m4 s: g In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* M0 d% O- @0 G+ j7 x) D6 TAugust, we said a credit shutdown was unlikely – we continue to hold that view.
; r6 S2 \5 W" ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension3 l5 M3 o6 h3 z" s7 Q
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.9 h. O- _& L. g# Y* L+ H8 h: f
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A look at credit markets
7 X Q4 x0 b5 ~4 D. j$ Q8 _ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
$ k S2 {0 W. gSeptember. Non-financial investment grade is the new safe haven.% c; B- I( Z0 N2 x- H% ]& K
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%, a3 U) S* m" Y8 {2 R# K8 V, A
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $11 E/ S% ~5 g/ N) {
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! q. o; o7 R) H: v* {' |
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade3 I3 G4 J1 x! R5 ?0 O1 j9 U
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
2 R! m$ z! `) Y6 W& x$ Q6 q! q0 T2 bpositive for the year-do-date, including high yield.
5 m7 d2 ^2 X# E; V8 p+ u4 a Mortgages – There is no funding for new construction, but existing quality properties are having no trouble/ l2 C* k2 e/ l1 |* Z2 c1 S: [
finding financing.
" \$ t0 {0 u1 W- a& z" H Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. ^- N6 \% b1 E7 s5 swere subsequently repriced and placed. In the fall, there will be more deals.
. ] _5 r9 B* C9 W% m b% } Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and; j; L0 x' ~, D& G7 X8 n- S
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) [/ O' y5 d+ t" pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
* i0 t ]! l/ a" @! u6 s8 R* [bankruptcy, they already have debt financing in place.6 p4 Z+ X( r# t) A' c
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
) y0 p% I( o9 e6 mtoday.
5 Y, `( U# ]* O, V/ Y! q* V Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
4 c, ~' O. X- i$ q4 eemerging markets have no problem with funding. |
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