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发表于 2011-9-17 13:16
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Current situation
8 J" Z; k, ^' w' k The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- W4 o* n5 r4 U/ |& p6 f/ M! u
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
' |; C, X0 x# b( Simpose liquidation values./ d: e p$ o1 {3 B8 \2 G& w
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
+ K3 s# X- Q4 s/ {5 S8 h/ kAugust, we said a credit shutdown was unlikely – we continue to hold that view.
2 z; ~) g' B% {0 C8 n2 b' u5 Z The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ t' t* B1 b' r: U; Z
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
2 E6 A6 l Q( s5 A3 D8 S Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 V4 o1 }# o/ g6 X! \
September. Non-financial investment grade is the new safe haven.- |1 M& B9 m3 Z* B- h/ o
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
; M i: g7 y) X" gthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
* y, C* Y& E7 m; b/ J& c2 ?1 D. rbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have3 f/ m. W5 G8 z& i6 I
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
0 G- \5 }+ K1 q9 r3 fCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
6 Q3 m( v0 f2 o4 b) _positive for the year-do-date, including high yield.
9 c: m) R7 f ? t* V& l Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
, G7 i5 f% Q9 `finding financing.% ]5 U6 _9 M K+ J
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 G: ?2 S1 Q) [9 k4 a. j* Q" b
were subsequently repriced and placed. In the fall, there will be more deals.8 ~: ]7 j" S' @. ]; k( P6 Y
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
- W8 {2 q4 @5 ^4 { Qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 Q/ c+ i* [; t: K6 ^, `going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for0 ?- f+ X; ?2 e6 g3 t3 i; [; H8 p
bankruptcy, they already have debt financing in place.
: ~3 g. C7 S+ d, V European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ V" D9 `' H, n* e; E
today.
e% N5 ~. c; M: R( e Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' e6 a# f$ j- [7 u" e, v0 Yemerging markets have no problem with funding. |
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