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发表于 2011-9-17 13:16
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Current situation
* }& I, }6 R0 I' s( {) @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long' _- W7 j* o- H6 L6 g
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may/ T, [& ^% R: c; b: |
impose liquidation values.1 f* ~! X0 J* W3 X5 Y. d$ Q
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In, o1 ?, F& e! V$ A9 a
August, we said a credit shutdown was unlikely – we continue to hold that view.) z y+ k* S6 a5 W
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 S6 M' l4 {) [$ gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets., t' l) {. p+ l0 ]7 \; p
) t, _/ |1 B1 i) TA look at credit markets8 n- I4 y& {+ c/ L" m& I/ q: x$ W
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
! P% V' }7 w$ \# o! G8 H5 @September. Non-financial investment grade is the new safe haven.8 z+ G& T" S' D3 }1 J& P* Y
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%) W/ V! d8 l4 z+ S( r5 R
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
+ l8 d! M) |% t4 `3 r4 X7 fbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, v3 P; u# J% X2 g: }access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade% x& W% `- U4 m3 E9 T
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 d0 ]+ [+ A0 K, t2 ]7 Bpositive for the year-do-date, including high yield.
8 C$ G5 E$ R: t% f A Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
+ ?6 U4 m% k" gfinding financing.. _! D, \3 T1 Z. Q' J) e( S
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
" k W% f. l0 M2 kwere subsequently repriced and placed. In the fall, there will be more deals.5 [5 X6 j, r, f
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
: e4 V6 M8 L# P7 l1 {& \& L fis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were" u- c, J5 X. J' K* @, u# k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
9 X; a/ t! d t" F9 u8 Jbankruptcy, they already have debt financing in place.% L/ B6 T' `( M/ D/ T
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain) j' T% ~1 l% I6 x
today.
2 X; T9 s) p% R/ Z$ w' w5 _7 G Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in/ p e+ Z# ^% g* u" d5 t9 Q
emerging markets have no problem with funding. |
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