While the gyrations of the market certainly have been disturbing over the last week, it remains unclear whether or not the current state of things can be compared to 2008.
One of the more interesting developments was the downgrade of the United States’ AAA credit rating by S&P last Friday. What is very telling about the downgrade is how the markets have reacted to it. While the markets spiraled, people went to Treasuries as a safe haven which drove yields down, rather than producing an expected spike. Also, yesterday the Fed came out and indicated that they wouldn’t be touching rates till mid-2013. As a result, banks will continue to have a borrowing rate near zero.
On the surface this environment may seem encouraging for those looking to borrow money, since Treasury yields and the discount rate are low. It doesn’t necessarily mean that corporate America will see the benefits reflected in the cost of their borrowing, however. Back in 2008, we saw a very similar trend. People flocked to Treasuries driving yields way down, but at the same time borrowing costs skyrocketed and credit became very difficult to obtain.
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
