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发表于 2011-9-17 13:16
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Current situation
' n& b/ e2 h+ F: D The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ y" l# O# h3 w# B7 T
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
" U! V% ~; p4 N# X6 W* fimpose liquidation values.- a! q6 n* D; w _, Q- g; T: g1 v
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In; c; i- z2 o" ]8 e
August, we said a credit shutdown was unlikely – we continue to hold that view.
7 |3 s+ U- \/ h. f4 N! z: ^2 k8 c The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension& O4 E; X+ }9 `, M9 l- A0 H, Q% V
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.. E% ~* x( `/ [. E' `
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A look at credit markets
% p. T2 G% [7 }' L4 M2 j Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% Y7 N, A7 u8 b1 R7 Y
September. Non-financial investment grade is the new safe haven.
. |. G$ ~4 V9 }* w# Y3 I High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%: c: J5 p9 ^1 b" y+ F, u D
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
, Z6 Y7 ~' S8 hbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
; G2 i7 s. d/ }' N8 `/ T( T, m! @access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# P& x6 H/ L; @9 M8 p+ z7 N# d
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
! `& }0 |; _* Npositive for the year-do-date, including high yield.& D( A; B, R% _4 U+ m
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
H7 q* r y: ]finding financing.
! i* q: X* K8 B+ k4 [ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they6 Q0 E1 \4 J* T7 m4 a2 b
were subsequently repriced and placed. In the fall, there will be more deals.
! a0 }, Y5 R& P3 e8 z" k Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
! Z( d: p" d8 D5 k, ?7 J9 D* Cis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were2 y+ f" x, ?: o* {# f' x0 N+ H
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for5 R4 a% M6 S) Q
bankruptcy, they already have debt financing in place.
- G }7 P% s$ L7 l& R. B- c0 g European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain' ]9 b9 h* g' ]
today. ]" `, D3 _2 {; i2 r) `" K
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
4 _- M+ \' { H9 Q) Xemerging markets have no problem with funding. |
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