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发表于 2011-9-17 13:16
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Current situation7 Z" Z7 g+ [: T0 f! f
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
( w4 G* e& @; ]8 uas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 Y9 @3 w; H+ O3 [) q
impose liquidation values., d- @2 H# Y, L. H7 q* L
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
8 c/ X* m( l$ q# m) yAugust, we said a credit shutdown was unlikely – we continue to hold that view.
" p) D, w: m: {* @: A6 ^ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ }! ?" A: g; Y7 R- ` ?
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.0 V% q; b0 t5 y: Y$ i# a
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A look at credit markets
]7 Z, ^! L# S2 j* r5 g. Q, {) q Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 g( B. o% U/ C6 n" i6 B. ESeptember. Non-financial investment grade is the new safe haven.
( {% E2 q: A" C5 f1 Y High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
3 l: L* T' t% V6 ?3 n4 F$ v" Uthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
' H) [7 d9 ]) w. { }billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
& u2 v% t* B% q( y4 [access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade t; ~/ K/ T/ e& Y7 I- p+ q
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
% c8 h7 S& Q) y. E2 `positive for the year-do-date, including high yield.
8 u1 A6 I! Y: v* u" P0 w5 ` Mortgages – There is no funding for new construction, but existing quality properties are having no trouble2 Z) F7 F/ F- r/ T+ e, ~! U2 f
finding financing.
3 r0 [ L% v3 D0 N4 b: @- o; h8 s Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
! p$ s; H6 M+ E/ E) cwere subsequently repriced and placed. In the fall, there will be more deals.
: t5 X3 v- R6 E Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
; y& ^: g' p9 b3 z* ~" q4 y" ]is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 S$ f) s8 Z. R9 f4 M% g% h$ ggoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
9 N; t8 ~* a% O/ x% ]" ^bankruptcy, they already have debt financing in place.
5 C' _* S1 F% F% s& n) {; X European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
- n6 p4 w: Q! t+ J$ Q8 n3 ntoday.8 d# Z0 c- n0 x s
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in) ]+ e- Z7 }) x1 ]+ T( V
emerging markets have no problem with funding. |
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