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发表于 2011-9-17 13:16
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Current situation
$ U- a8 ?, k9 Q9 c; X( k/ o The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
% O. M4 A4 E y- L; Eas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* u. j O( h' S+ [
impose liquidation values.
: I w" P, [6 V5 s( o1 ?) e In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In0 J9 {4 K7 ]& }, Z7 o: Z& s% f s
August, we said a credit shutdown was unlikely – we continue to hold that view.) x/ B: l. K2 ]1 Q) [. i
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension& X0 G; C4 ^7 Q3 j4 e9 I, M, [
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! m8 U h! A2 S$ s
9 |0 K! O3 Q4 `5 y. qA look at credit markets" r, g# R, Q* U5 G, C) U" y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 a3 Y# i7 O" S" F/ t C2 `
September. Non-financial investment grade is the new safe haven.) X5 T5 k1 {( W1 {7 H* J$ e
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
0 Z4 ]. n# o$ k7 Pthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1, P4 v* c% w- L% f
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
. W: h6 K* i5 u/ T$ W; K- Aaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# D9 D, y1 \! n
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are- H/ U0 T7 a( a8 D2 n5 |
positive for the year-do-date, including high yield.
5 M& W5 C4 A/ P* \! Y+ Q1 Q, } o Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
8 r# n- g0 S2 R" _. o0 h' zfinding financing.) L% `# G, B6 Y% L! u! A$ R
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
( m* A3 e& {! `/ p8 }$ l/ L) N) Vwere subsequently repriced and placed. In the fall, there will be more deals.
7 Q o6 ]! h% U% f- P4 n* i Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and. w' I4 U1 r9 R) y* z4 A
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were& J/ l, {/ Z9 q, R) {3 k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for! b) `0 D4 H' J( N
bankruptcy, they already have debt financing in place.
0 i! k n3 K5 `& u& k @& ^) g. ] European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain! }+ d0 |: J+ `
today.$ o" a: j; J; @7 Q4 _6 n. J6 w
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
; ]7 }) U& t* M5 J' Q! K5 N" c remerging markets have no problem with funding. |
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