Post on 05-Jul-2020
Global Capital Markets
London Summit: Global Capital MarketsLondon Ι October 13, 2015
Source: BloombergOct92015.
Developed vs. Emerging Market Equities
0
50
100
150
200
250
300
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Index(2005=100)
Emergingmarket
Developedmarket
Assets of the 4 Biggest Banks (% of GDP, 2015)
Note:Latestdataused(October2015).*Singaporedataincludesonlyits3publiclytradedbanks.Sources:Bloomberg,IMF.
379
254 251 235
177138
112 10781
45 40 27
Concentration of Three Largest BanksTotal assets of top 3 banks as a percentage of home country’s gross domestic product
Note:8/7/15.Sources:Bankscope,SNL.
0
50
100
150
200
250
France UnitedStates
Crédit Agricole
BNPParibas
Société Générale
197%ofGDP($5.6T)
37%ofGDP($6.4T)
J.P.MorganBankofAmerica
Citigroup
Asia Banking Assets
(% of GDP))
Note: Latest data used (8/7/15). 2015 for publicly traded banks, and 2014 for GDP.Sources: Bloomberg, IMF.
277
207 196175 166
121 10770 63
37
U.S. and Fortune 500 Employment
America Goes to Work
60
80
100
120
140
160
180
200
1970 1975 1980 1985 1990 1995 2000
Modern capitalmarkets begin
New financial technologies are fully implemented
U.S. = + 62 million jobs
Fortune 500 = minus 4 million
0%
20%
40%
60%
80%
100%
Banks CLOs Hedge,distressedandhigh‐yieldfunds
Primeratesfunds,financialandinsurancecompanies
Institutional Investor Base for Non-investment Grade Loans
Sources:S&PLCD,JPMorgan,WellsFargo.11/11/14)
Sources:BIS,ECB.
0%10%20%30%40%50%60%70%80%90%100%
Spain Germany Ireland Italy Portugal France UK
Bonds Loans
European Credit is a Bank Market
Bondsandloansasashareoftotalcorporatedebt,Q12015
Source:BloombergOct92015.Note:Cashandmarketablesecurities.Q2numbersusedforcompaniesnotyetreportingQ3.
15
61
23 15 722 25
8 8
203
131
9774
56 5430
13 110
40
80
120
160
200
240
Apple+1218%
GE+115%
Microsoft+312%
Google+386%
Oracle+697%
Cisco+144%
Pfizer+19%
Chevron+54%
Merck+39%
Q42007 Q32015US$billions
3.00%
5.00%
7.00%
9.00%
11.00%
13.00%
15.00%
High Yield Monitor
Note: Past performance is not necessarily indicative of future results. Any investment entails significant risks, including loss of the entire investment. Source: JP Morgan. Data presented is as of September 30, 2015.
Lower Quality Paper DivergingYield 12
Month Δ
CONFIDENTIAL |
10
CCC
B
BB
BBB
YTW
13.7%
8.4%
6.3%
5.1%
+420 bps
+208 bps
+121 bps+67 bps
HY Index
8.4% +200 bps
$35
$50
$65
$80
$95
$110
5.00%
7.00%
9.00%
11.00%
13.00%
Jan 2014 May 2014 Sep 2014 Jan 2015 May 2015 Sep 2015
HY Index
Source: JP Morgan. Data presented is as of September 30, 2015.Est. HY Index (Excluding Energy) is an estimate modeled by BSP of the JPM Domestic HY Index excluding the performance of securities of energy issuers. Oil price represents the price of a barrel of crude oil.
High Yield Monitor, Cont’dHigh Yield and Oil Price
CONFIDENTIAL |
11
Yield Oil Price
Source: J.P. Morgan research. 1 Source: J.P. Morgan research. Distressed debt is defined as par-weighted of high yield index trading below 80. The high yield index referenced is the JPM US HY Index. Please see not 4 at the end of the presentation for more information. As of September 30, 2015.2 Source: J.P. Morgan. “Default Monitor: High Yield and Leverage Loan Research”. As of October 1, 2015.
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12
Distressed Debt
Distressed Debt as % of the High Yield Market1
The distressed sector, traditionally defined as issues trading below 80, has increased to 9.3% of the high yield index as of September 30, 2015 versus 1.2% on January 1, 20141
Notably, $42.2 billion of the $51.4 billion of bonds trading below $50 are from the Energy and Metals/Mining sectors, accounting for 82% of the distressed high-yield universe2
9.3%
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%
Oct2010
Aug2011
Jun2012
Apr2013
Feb2014
Dec2014
Sep2015
High Yield Bonds Priced Below 80
Credit Metrics
Source: Deutsche Bank US Credit Strategy Chartbook. Data presented is as of August 31, 2015.(1) Total leverage multiples represent Total Debt divided by Trailing 12 month EBITDA for the subset of high yield issuers that consistently report financial numbers publicly.
HY Issuer Total Leverage Multiples1
3.5x 3.7x4.1x 4.3x
3.6x 3.4x4.0x 4.2x 4.4x
5.1x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD
CONFIDENTIAL |
13
0
1
2
3
4
5
6
7
2007 2008 2009 2010 2011 2012 2013 2014 2015
Percent
Bank of England
European Central BankBank of Japan
U.S. Fed
Source:BloombergOct92015.
Central Bank Target Interest Rates Remain Low
U.S. vs. Europe High-Yield Debt Markets
3966 66
83121 123
7492
162127
213197 187
133
0
50
100
150
200
250
2009 2010 2011 2012 2013 2014 2015YTDEurope U.S.
Issuance,US$billions
Source:AFMEHighYieldDivision.Note:DataasofQ22015.
Shanghai Stock Exchange 2000 - 2015
01,0002,0003,0004,0005,0006,0007,000
2000 2002 2004 2006 2008 2010 2012 2014
Index
Source: Bloomberg (10/10/15).Note: Shanghai Stock Exchange Composite Index.
U.S. Percent of World Market Capitalization
2527293133353739414345
2004 2006 2008 2010 2012 2014
Sources:Bloomberg,MSCI,BofA MerrillLynch.
Percent
Commodity Returns in 2015
Source:BloombergOct9 2015.Note:Metals=LME3mth,GasandOil=NYMEX,HeatOilandCoffee=ICE,Commodities=CBOTandICE.
6‐1
‐3‐5
‐12‐14‐15
‐17‐17
‐18‐19
‐27‐31
‐40 ‐30 ‐20 ‐10 0 10
CocoaCottonGold
GasOilSoybeans
HeatingOilAluminumCrudeOil
ZincNaturalGasBrentCrude
CoffeeNickel
Percent,2015YTD
Currency Returns 2014 - 2015
‐1%‐5%
‐6%‐7%
‐9%‐10%‐10%‐11%
‐12%‐14%
‐15%‐17%
‐17%‐18%
‐20%‐36%
‐40% ‐30% ‐20% ‐10% 0%
SwissFrancBritishPound
TaiwaneseDollarSouthKoreanWonSingaporeDollar
JapaneseYenEuro
DanishKroneSwedishKronaCanadianDollar
NewZealandDollarAustralianDollar
SouthAfricanRandMexicanPeso
NorwegianKroneBrazilianReal
Percent,past12monthsending10/9/2015(USDbase)
Source:BloombergOct92015.
Exports to China
0.5%
0.7%
2.1%
2.7%
0.6%
5.6%
7.1%
10.3%
0% 2% 4% 6% 8% 10% 12%
UnitedKingdom
UnitedStates
Germany
Japan
India
Australia
Chile
Korea,Republicof
PercentofGDP
Majordevelopedeconomies
Sources:InternationalMonetaryFund,J.P.Morgan.
Emerging/commodityeconomies
Chinese Iron Ore Imports
0102030405060708090100
1983 1987 1991 1995 1999 2003 2007 2011 2015
Millionmetrictons
Source:Bloomberg.
Source:Datastream.
60
65
70
75
80
85
90
Millionmetrictons
China’s Volatile Iron Ore Imports
Monthlyimports2014– July2015
Source: BloombergOct92015.Note:Yield‐to‐worstOAS10‐yrBarclaysindex.
High-Yield Spread
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Percent
0
20
40
60
80
1955 2015
Life Expectancy in Southeast Asia
Source:UnitedNations,DepartmentofEconomicandSocialAffairs,PopulationDivision(2015).WorldPopulationProspects:The2015Revision,customdataacquiredviawebsite.SoutheastAsiaincludesSingapore,Indonesia,Philippines,Malaysia,Vietnam,etc.
Source:JamesRiley,OECCD,Statista.“Today”=latestavailabledataasof2015.
Life expectancy at birth: 1900 - present
Asia Europe United States
1900 28 43 47
1950 42 65 68
Today 72 78 79
Increase: +160% +80% +70%
Source: Bloomberg.Note:Datafrom10/9/2014‐10/9/2015
Brazilian real per U.S. Dollar
1
1.5
2
2.5
3
3.5
4
4.52010 2011 2012 2013 2014 2015
RealperUS$(invertedscale)
Median Age Around the World
Sources:UnitedNations.WorldPopulationProjectionsNote:Selectcountries.
Singapore 40.0
Thailand 38.0
Vietnam 30.4
Indonesia 28.4
Philippines 24.2
Southeast Asia 28.8
ALL ASIA 30.3
China 37.0
U.S.A 38.0
Russia 38.7
UK 40.0
Germany 46.2
Japan 46.5
ALL WORLD 29.6
Global Capital Markets
MichaelMilkenChairman,MilkenInstitute
RichardByrnePresident,ProvidenceEquityPartners
RobertKricheff
SVPandPortfolioManager,ShenkmanCapital
Management
PaulTaylorPresidentand
CEO,FitchRatings
KatherineGarrett‐Cox
CEO,AllianceTrust
BrigittePoschHeadofEmerging
MarketsCorp.Debt,Babson
Capital