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发表于 2011-9-17 13:16
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Current situation
6 [+ W* I& e( K/ u, u1 @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long7 Q2 e" ?/ X$ A. p- |" C
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. y6 F# p. ?; l% G
impose liquidation values.0 ~) Q" e' k( N V" t; r
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In9 e1 g' f: j" R b
August, we said a credit shutdown was unlikely – we continue to hold that view.: I& S$ _* ]- l/ x( I) O5 ]
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. H" A* r+ j4 e- K2 M0 Y
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.; o3 m# k: q% a7 \( m
& D. D* ^+ h" c1 i! b2 C! n2 S
A look at credit markets& B3 w* t8 ^) o2 P6 {6 u
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in2 c% Z( n8 |6 i1 t" j
September. Non-financial investment grade is the new safe haven.+ C: A3 v: |6 V' e. _: y B
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%0 ~% B' p1 R& w, \
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $15 U5 |/ | ]( L5 }: i& e$ B
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have' x/ D; ^* {. [ R2 k8 j
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
1 l- T4 G1 A! {7 m5 C1 {, q; Z2 ^CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are! `) f2 R! D: i4 V$ A! x# I1 e( z
positive for the year-do-date, including high yield.2 m# B7 Q% p! b4 G8 |9 w# V8 J
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
) U( q# c. m$ M; q0 C9 ]" G& wfinding financing.
4 j" W; e k H% q: S2 z8 @5 E Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- v5 e4 `( d4 I: ~, K
were subsequently repriced and placed. In the fall, there will be more deals.6 h" j f. y$ u- i9 a: l
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& R1 h& }" \! f' jis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
# `& S1 z) [% W) h# `# Ogoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& B2 a! _# _. T' @' P( |6 h% d/ l
bankruptcy, they already have debt financing in place.* u/ j8 C4 P6 F/ n& n: {
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
, ]9 }# F7 i$ v4 h; R6 {0 @' Stoday.
1 ~8 o/ [: t- i# W$ y1 O1 ]' [, X8 T Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: q/ V o% k5 Y. s, u
emerging markets have no problem with funding. |
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