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发表于 2011-9-17 13:16
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Current situation
0 w! B9 |- O% I% n% D The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long/ R5 O0 p, A& I5 c& X" ]' ^
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may0 p4 d' ~5 \7 W: N8 G
impose liquidation values.
7 J, H2 M# Q' P7 k' C In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
7 `" A8 \4 r: d6 \August, we said a credit shutdown was unlikely – we continue to hold that view.
. T: o* j1 v/ L4 v4 M The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 @ S* ]) `: u2 q) D _, e6 x3 x
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.1 `3 Z( z; B b. N- j. _
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A look at credit markets! e8 w( v4 [) Q) B3 i6 P# H
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
' J v4 ~) Q2 j' zSeptember. Non-financial investment grade is the new safe haven.
6 g8 K! j9 k( x, Q7 F+ c High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%# S& d6 O+ e8 @8 P+ ]
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 m4 L3 [. ]5 g+ }0 z
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have# K" Y9 h. @0 w
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade1 b. |) v/ d7 b
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are4 e$ W( a5 f) Y: v
positive for the year-do-date, including high yield.+ R( s/ ^& v1 U$ o% R: k( T! Z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# E1 M7 \. N7 r3 N
finding financing.
$ |# o2 x4 P2 \4 e+ ^! _8 y Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
9 ]. D7 B/ b8 W9 T7 p" Q7 t8 H% wwere subsequently repriced and placed. In the fall, there will be more deals.8 M7 M& m( Y! A+ l2 Z3 ]
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
% S8 K1 H p/ Z& ^is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. |/ Q) ^; P. a2 F: d0 Z. egoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for B* y: S! U* b/ b r
bankruptcy, they already have debt financing in place.
+ D+ a' g# p7 i; F; h European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
4 D/ B9 I/ S z7 z( t8 N* _today.
! m# ^9 |9 o& v Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
1 c% w+ t2 X$ q! D. Lemerging markets have no problem with funding. |
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