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发表于 2011-9-17 13:16
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Current situation" H0 p- x+ M. U2 _% t6 S
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long; b4 j) |. a# }! B( s4 F
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
0 l) P( D% L; ~6 J8 T# {impose liquidation values.
7 o6 G0 l- q% i& p$ M2 O In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In) L: S1 p' P" N, C
August, we said a credit shutdown was unlikely – we continue to hold that view.2 `: K, B* t% \& r! y% m6 O9 Z8 A
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension3 D% R% k$ U) f- y4 h- ]
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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3 A* h# e+ | E4 w( ^/ ?8 }. l& J+ FA look at credit markets# ?* n# x* E6 d- k8 z) V
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in) h8 P5 H4 v$ ^/ n2 _
September. Non-financial investment grade is the new safe haven.: C& Z4 y$ g( f+ g
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%& F c8 S; `5 i% V. |8 e6 a
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1( ?# {. l9 w4 u9 _$ K
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
. E4 q5 E9 G8 W) S* caccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade, Y3 p3 R/ H. Q: H
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are+ m5 [' {9 Q8 q# L) |, W
positive for the year-do-date, including high yield.2 ]& i' z2 y1 k) x
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
; E1 i# n5 b* X, Q" jfinding financing.( A% i# X: X. N) V+ A
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
- i: u! @0 A0 xwere subsequently repriced and placed. In the fall, there will be more deals.* ^ u' `# N; ~7 I* s6 N$ z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
1 F3 Z" O8 T2 {& f( ]5 h3 |is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 I8 K5 K6 G% z4 t- f5 Z7 g5 d# X
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& F* i3 \* b7 r
bankruptcy, they already have debt financing in place.: s" k9 ~* P0 |+ v3 }! e
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ ~* @; a) L @' D5 |& y0 X0 ^+ ^
today.
8 ^ P! [/ y- F' `* g7 [ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ e$ z I3 M( q$ E. |8 `& D4 o6 m9 temerging markets have no problem with funding. |
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