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发表于 2011-9-17 13:16
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Current situation
" [1 D& M) l% } The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
2 H; \6 Q! H) |7 E2 W9 ras funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& y: v$ N j6 m. E0 w
impose liquidation values.
& o0 K" ?: C, \ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 K8 i7 p/ x0 h* L8 RAugust, we said a credit shutdown was unlikely – we continue to hold that view./ L: E) l5 Y% A/ J: W* l8 W2 A9 b
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* A' j: Z. s( h/ R+ T9 R
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets( o# Y7 b4 N3 s) n6 t
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in6 D' j; P- H3 |& n6 _8 z6 E
September. Non-financial investment grade is the new safe haven.
2 `* ?( U+ m) z6 M2 |6 |; I2 g High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! L9 r+ g+ I! m R( J( X
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
& y5 W& o+ U5 M0 H. r1 K( D/ }billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
# g+ c5 o1 B9 d! naccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
* I' R! v, n/ R5 j5 Z C5 iCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
: K, t6 ` W' T( Y( Upositive for the year-do-date, including high yield.% Q; @( L5 a4 `* V4 J8 S
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( D# D. L |0 b; D9 Kfinding financing.
- O* T Y9 y( B; y- L Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they' [& L6 {2 M5 U5 A0 {
were subsequently repriced and placed. In the fall, there will be more deals.( L+ w, X/ }! [8 m* q
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and$ M1 o6 K& u2 c- \( _! J: R" U V' i
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
& T, j! D, f( ~: y% J, t6 |/ }0 pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' K3 L" K9 Q7 B+ V
bankruptcy, they already have debt financing in place.- |6 z5 l9 Y+ ~' U% }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain8 Z" s8 r5 A+ x7 M5 Y
today.# {/ S0 ]9 J0 R4 `, `+ Y
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 ^: F2 w& h* `% z n3 F: x( uemerging markets have no problem with funding. |
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