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| Weekly Interest Rate Tracking |
| October 24, 2008 |
Good Afternoon,
Attached is a PDF copy of Colliers Meredith & Grew's interest rate sheet that includes current and historical Treasury, LIBOR and Prime interest rates, which are updated daily with real time data from Strategic Alliance Mortgage.
We provide these updates on a weekly basis to keep our clients and colleagues aware of rate movements. We hope you find this information helpful.
DOWNLOAD INTEREST RATE SHEET (53KB)
The following Market Perspective provides insights and commentary on breaking news and emerging trends in commercial real estate finance.
Investors Want Out, Treasuries Rally in Historic Flight to Quality: Stock markets plunged around the world this morning as concerns mount that deteriorating economic conditions will negatively weigh on earnings. At 11:00 AM EST, the Dow Jones Industrial Average, NASDAQ, and S&P 500 were down 3.91% (327.35 points), 3.61% (55.90 points) and 4.07% (35.50 points) respectively. Yields on Treasuries with long-term maturities went into a free fall this morning as investors around the world poured money into cash and treasuries in a market-wide flight to quality. Treasuries rallied across the board, "sending the yield on the 30-year bond to the lowest level"—3.99%—"since regular issuance of the securities began in 1977", according to Bloomberg. At 11:00 AM EST, yields on 2-, 3-, and 5-year Treasuries were down 9.72%, 8.94% and 5.25% respectively, according to Strategic Alliance Mortgage.
Fed Loans "May Not Be Enough", AIG's Financial Products Unit "A Big Black Hole". Oct. 24 (Bloomberg): "AIG has used $90.3bn of a U.S. government credit line since it was bailed out last month, an amount exceeding the size of the original loan meant to save the insurer. AIG may need more than the $122.8bn now available to the New York-based insurer, CEO Edward Liddy said Oct. 22. The company, which agreed Sept. 16 to turn over majority control to the U.S. in exchange for an $85bn loan, got access to an additional $37.8bn this month. AIG's latest balance was revealed yesterday by the New York Federal Reserve, and is up from $82.9bn a week ago. "This emphasizes the uncertainty for anyone trying to put a number'' on AIG's cash needs, said Bill Bergman, an analyst at Morningstar Inc. in Chicago. The financial-products unit that caused most of the firm's losses "is a big black hole.'' Liddy, the former Allstate Corp. CEO appointed by the government to run AIG last month, is selling businesses including U.S. life insurance, plane leasing and consumer finance to repay the loan. AIG, which averted collapse last month with the Fed loan, is dependent on "what happens to the capital markets,'' Liddy said on PBS's "The NewsHour With Jim Lehrer.'' The firm needed cash after credit downgrades forced it to post more than $10bn in collateral to clients who purchased guarantees on bonds that lost value. "To the extent they continue to go down and we have to keep posting collateral, as it's called in the vernacular of the industry, it's possible it may not be enough,'' Liddy said. AIG fell 37 cents, or 17.62%, to $1.73 at 11:15 AM. The company's shares closed at $63.84 a year ago."
Colliers Meredith & Grew Perspective: Expect treasuries to remain volatile as they ebb and flow with the equity markets. As equity markets tumble, there will be an associated flight to quality, pushing yields on treasuries lower. But as the Fed acts to inject more liquidity into the system, inflationary pressures will weigh on investors, and in turn push yield requirements on treasuries higher—particularly in the long-term (10- to 30-year maturities) where inflationary pressure is most acute.
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| Please contact the Capital Markets Group at Colliers Meredith & Grew with any financing questions.
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Colliers Meredith & Grew is a Boston-based commercial real estate company with integrated service groups including Brokerage, Capital Markets, Counseling & Valuation, Development & Advisory, Investment Sales, and Property & Asset Management. In addition to representing its core clients in New England, Colliers Meredith & Grew provides national and international real estate services to its multi-market clients as a member of Colliers International and as an owner/member of Strategic Alliance Mortgage LLC (SAM). Colliers International is a worldwide affiliation of independently owned and operated companies in more than 290 offices in 61 countries. |
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