Live Oak Capital

Matt Pitcher

My latest BiggerPockets.com blog, “The State of the Economy: Pain Management or Redemptive Suffering?“, is now up.

Enjoy,

At the end of last week, Treasuries were little changed, with yields near record lows after the U.S. said it is willing to use TARP funds to provide financing to US automakers in the wake of the Senate’s rejection of a rescue plan. Yields on three- through 30-year U.S. securities dropped to their lowest levels on record as investors fled global equities for the safety of government debt.

The yield on the 10-year note rose 0.01% to 2.62%. During the week, it fell to 2.478%, the lowest since 1954. Although rates on 90-day T-bills fell to -0.01% this week, they ended the week unchanged at +0.01%. The 90-day US dollar LIBOR fell to 1.99% from Wednesday’s fixing of 2.099%, marking the first time LIBOR has fallen below 2% since 2004.

Although Treasuries are falling, lenders are holding their rates steady due to the secondary market’s perception of risk and increasing yield demands in the buying of loans backed by commercial real estate.

Matt Pitcher

No blog this week as I’ve been in all day back to back investor presentations for the dental project this week.

While U.S. Treasuries, swaps and libor rates continue at historical lows, multi-family agency rates continue to increase over uncertainty about future secondary market pricing. At 6.7 percent, unemployment rose to the highest level since 1993 as the now official recession deepens. Even with the announcement of greater-than-expected job losses, the stock market held it’s own with the Dow closing at 8635. The government continues to consider the possibility of bailing out the auto industry, while Obama and Bernanke continue to explore additional aid and stimulus packages.

Matt Pitcher

My newest BiggerPockets.com blog post is now up: “Simple Rules For Raising Capital, Part 2″.

Enjoy,

Treasury yields fell to record lows as demand for government-backed bonds strengthened due to industrial production in the U.S., China and Russia falling to levels not seen in 25 years. The yield on three, five, seven, and 10-year notes fell 7-9 basis points compared to the previous week. The 3-month Libor rose 6 bps to 2.22 percent on Monday, indicating that European banks are less willing to lend, helping increase demand for government debt. However, spreads have adjusted so that any change in the resulting overall interest rates is negligible. GSE-backed multi-family loans remain the easiest to obtain. Good quality, well-located, stabilized commercial properties are being financed. Higher cost bridge and mezzanine lenders are lending across most property types according to multiple sources.

Another dramatic week in the capital markets as retailers continue to struggle, unemployment reaches 25 year highs, and gasoline prices dive below $2 per gallon. Congress’ reluctance to bailout automakers without a defined repositioning plan caused the S&P 500 to drop Thursday to a loss of 49 percent for 2008. The naming of Tim Geithner as the incoming Treasury Secretary resulted in a 6 percent rebound in the S&P today. Ten-year Treasuries are at 3.18 percent, down 55 basis points from last Friday, and ten-year Swaps are down 66 basis points to 3.42 percent. Even so, agency spreads increased dramatically with mortgage rates rising an average of 40 basis points.

Matt Pitcher

My latest BiggerPockets.com blog is now posted. You can read it here: “Simple Rules for Raising Capital“.

Hope you enjoy it.

All my best,

There has been little change in lenders’ attitudes since last week.  Leveraged financing is still available for borrowers with strong financials and stable properties in primary locations. Weak borrowers and properties in secondary and tertiary areas still struggle to find financing.

During the past week, five-year Treasuries dropped 26 bps and 10-year Treasuries dropped 9 bps due to investors seeking the relative safety of government debt after a report showing U.S. retail sales fell the most on record in October. The three-month Libor rate rose for the first time after falling sharply during the past three weeks, telegraphing market concerns about the U.S. Treasury’s about face on the Troubled Asset Relief Program (TARP) to buy troubled assets. Two-year U.S. swap spreads widened to 116.50 bps this week from about 101 bps a day earlier, signaling investors’ risk aversion is rising.

My latest BiggerPockets.com blog post is now up here:

http://www.biggerpockets.com/renewsblog/2008/11/13/the-importance-of-being-nimble/.

Hope you enjoy it.

All my best,