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发表于 2011-9-17 13:16
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Current situation
( _' n! q% J; P* N. ~8 [/ n, q3 }- T The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 y2 r( R s; l1 b% V% P
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& I4 U7 ?& T* d) S& g; V
impose liquidation values.
% K% M8 `; h4 l: k In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In; J! U( k* _- D
August, we said a credit shutdown was unlikely – we continue to hold that view.* }1 l# A) N. b4 |$ |8 ^1 R; c
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
' m9 E* l7 C; x3 L6 S; Cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.3 q7 V7 H" D, o1 r; s0 ^# @; W
' j" t* }& r# J: XA look at credit markets
0 r8 ~- @' T9 @* u Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
" A+ c) j, U* b% n& O3 O& MSeptember. Non-financial investment grade is the new safe haven.5 W' D) I% ]7 {
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
6 z' ~" b7 j2 W/ O k1 ythen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
. X* m: W" `7 [+ M+ B, Y" xbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have7 h8 h& ]9 I! h6 C; Q8 i
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade- g+ \+ C) {, W: y/ d1 Q5 f T
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
5 C1 f* |$ T' J ^9 ?; Kpositive for the year-do-date, including high yield.
6 B v# N1 G- z! B2 M Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
- p3 b+ _' I/ A( kfinding financing.; q3 i5 b$ e( O2 ^9 J& ^
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they4 J' C+ u7 ^# r; x- F# h2 ?
were subsequently repriced and placed. In the fall, there will be more deals.3 W- S2 |; M, q$ x! ^' C" V/ H
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and, N& F7 g, B& ~% R8 [
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were" n* E" q. p( D! Q
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
7 \/ O/ G$ R# X( A4 n( l3 p' p3 ^bankruptcy, they already have debt financing in place.
# V. e. ~7 Y, R European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
: V; D! R# X y0 etoday.
$ }9 O, T( Z9 C: b5 w$ j Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
% W% Y& U8 z6 Q3 demerging markets have no problem with funding. |
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