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发表于 2011-9-17 13:16
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Current situation: {. R6 w: o" V) S2 r
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 _. i% J3 ~6 M, @as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 l {; `! D3 C; {- r' Zimpose liquidation values.
2 f% q$ U) v! S& s In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In6 k) [* w' j. w7 Z2 h, \) ^
August, we said a credit shutdown was unlikely – we continue to hold that view.
( t) g4 _ E" u/ M, f The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
: Z# z! n3 g2 ]3 Escrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
9 w2 ?2 y! O& o$ ~8 O4 e5 k! ?' `- ]8 h; s. v
A look at credit markets1 c8 u% \( k& e$ {# o* j3 N
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% t; Q. r- {. I" y1 I( V3 G4 v
September. Non-financial investment grade is the new safe haven.
8 e8 o- `! g/ z0 E- V8 y High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
$ w5 |- F( p7 A7 A8 Y5 @: Sthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1) P x7 ^' @& M+ S6 G
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
& i) o8 ?5 Y! Jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
: a0 w) Q7 B9 i2 _) tCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are" [/ ^* m4 N6 |6 G; e
positive for the year-do-date, including high yield.6 H/ K2 o% q4 A i3 D* x' u
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
6 e6 r: j( y# h% k) F& ofinding financing.
% \% ^- y- m" A# J; B) |- I Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they, F. M4 h% q4 B/ ` s* o
were subsequently repriced and placed. In the fall, there will be more deals.4 ]8 _$ U0 d& {( i Q% l
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
' N3 r" B1 p( sis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were) R0 K2 H4 J2 e# x$ i2 j5 ^
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
, s H7 }4 i0 ?. X8 tbankruptcy, they already have debt financing in place.: ~% D# X2 f! B% H: T+ d- M$ S$ Q! i
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
( b+ {5 I: s) Z* Ntoday.
' [! a, B8 N& n% Z! N Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
! Q6 ^# n2 M- F- d2 jemerging markets have no problem with funding. |
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