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发表于 2011-9-17 13:16
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Current situation
5 c) U% Z" z5 h4 s9 [, @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& P( v% Y3 w6 _; t2 R0 |
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
/ Z* J0 X( G3 M4 _+ e6 dimpose liquidation values./ i l! t& `7 a# z3 s" _" s" u
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
8 T( D5 o/ W+ n) i: V6 LAugust, we said a credit shutdown was unlikely – we continue to hold that view.
5 k% h; U+ x: e7 k$ H The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension( P( o/ P( l& |- I% z
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
7 G9 n5 |0 }% e7 v# ^$ p' e! h0 r Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in( ]; C& U- f4 S' ~
September. Non-financial investment grade is the new safe haven.
# F. G B1 B) \' }1 l# D0 G G5 A# [ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%# f$ M1 ]* w( ~* O$ @5 X
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 n6 x2 O+ E+ j. z; q3 F: r
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, _3 w o% Y9 saccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
" b' K3 v3 Y3 {3 F+ [CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# Z9 m; Z; ?' }% |7 P
positive for the year-do-date, including high yield.+ g0 @4 J! c' i( E* f# B/ T4 w! h2 C
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble+ q2 O. j/ ?4 e. y
finding financing., F: @$ E* h$ ?
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they* a/ q! K4 ], b
were subsequently repriced and placed. In the fall, there will be more deals.
" h2 {% b8 [. S0 q Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and$ R8 c8 q- x/ L+ T8 w/ w0 Z
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
+ h; F& `5 a# w8 C8 a& [/ lgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
! B, x6 t8 X+ E! A5 Kbankruptcy, they already have debt financing in place.* x2 K" {6 n# x8 w: G! H
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain7 M% Y8 N# K3 r
today.$ k, P% ^# q* ?
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
s7 J& H3 J5 Y. ?/ k, ]* q$ _emerging markets have no problem with funding. |
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