Wer mag: Goldman Sachs Credit Outlook (kam gerade rein)

Hi,

habe ich gerade von GS bekommen, aktueller "Credit Outlook", dieses mal gestaltet als "Q&A". Die letzten beiden Fragen sind vielleicht für den einen oder anderen interessant, deshalb kopiere ich sie 1:1 hier rein. Leider totalmente in Englisch, und zum Übersetzen fehlt mir jetzt gerade die Zeit. Aber Conclusio des ganzen Berichts: zwar alles sehr schlimm, wir werden es aber überleben, und wer Zeit & Geld hat, für den gibt's eine Reihe von "selective opportunities" ...

Q6. Is the current liquidity crisis in the credit market substantially different from previous market crises such as the 2002 sell-off in credit or the crisis that occurred in 1998 after Russia and Brazil defaulted on their bonds?

Flight-to-quality and risk aversion are fairly common in financial markets, as is talk of government intervention to avoid financial meltdown. Two factors distinguish the current crisis: the emergence of credit derivatives over the past decade and the fact that the financial sector is driving the economic slowdown.
In 1999, the total notional amount of credit derivatives was $600 billion. By 2006, the credit derivatives market had grown to $17trillion, primarily driven by the growth of credit default swaps (CDS). CDS arguably provide the easiest way to trade credit risk. Credit derivatives provide a viable way to short corporate credit risk, express views on market direction and help assemble structured products such as collateralized debt obligations (CDOs). Credit derivatives do not require large quantities of capital as they are funded via “margin payments.” As a result, many market participants were highly leveraged going into the current crisis. The impact of a slowdown, and the symptomatic widening of credit spreads, is therefore, going to be experienced broadly by investors than in previous slowdowns. We are now witnessing the systemic unwinding of this leverage, and corporates are only
one of the asset classes feeling the pain. However, for investors with a long term view and the capability to evaluate the fundamentals of individual credits, we believe the current environment can also offer some historic opportunities to purchase sound credits at significantly discounted prices. A second factor that distinguishes the current crisis is that it is concentrated in the financial sector. The last severe banking downturn was in the 1990-1991 recession. Because of the inherent leverage in the financial sector, problems in subprime mortgages and in the housing market are being amplified. And because the banking system is the mechanism for providing credit in the overall economy, problems in the banking system are creating a situation in which the housing sector is having a much
broader contagion effect on the overall economy than might otherwise be the case.

Q7. How did we get to the point where problems in subprime mortgages could have such a significant effect on the financial system and the overall economy?

A complex set of linkages has produced unprecedented levels of contagion throughout the financial system. Weak housing and the subprime mortgage meltdown were at the leading edge of the storm. As rising delinquencies led to falling security (CDO) prices, investors were forced to not only take aggressive write-downs but also question the validity of the entire securitization model. Leveraged loans, an asset class heavily reliant on the securitization machine, were next to tumble. An enormous backlog of loans had been built up over the course of 2007, and with no collateralized loan market to sustain it, prices fell sharply, producing another round of write-downs for the financial community. With capital eroded, financial institutions took yet another turn for the worse. The securitization market went into reverse, where assets held in off-balance sheet structures, such as Structured Investment Vehicles (SIVs), declined in value, making it more difficult for them to obtain financing. Many of these assets were forced back
onto balance sheets, further crimping capital. For the few banks and brokers fortunate enough to still possess sufficient capital, most have understandably opted to retain liquidity. For those without sufficient capital, the focus is squarely on reducing risk and raising capital. The result in both cases is similar – there is less money to lend.
Diminishing credit availability produces slower economic growth. This reinforces the negative trends already in place, spreading losses to other asset classes such as commercial mortgages and consumer installment debt. The cycle will ultimately be broken, but not until the system is injected with sufficient liquidity, institutions are recapitalized and risk appetite is re-established. This will take time.