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发表于 2011-9-17 13:16
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Current situation
' B+ J/ k3 _' d2 u2 ^- j1 X \8 l; Z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 S& ?9 K8 K% J8 L7 E4 ^2 l J: ^$ O
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& Z/ K- t7 Y& L( u, t0 k" w$ l
impose liquidation values.
$ E; K( |' e( E; v$ d2 Y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
; I2 a) Y1 W5 y8 T" l" G/ q" JAugust, we said a credit shutdown was unlikely – we continue to hold that view.
. Q# f8 D( q/ w! g" T8 g0 J1 f9 F The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 o* ]5 Q" c8 v' b; R) a, L1 n B
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! n; b3 E0 a# T' g9 s
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A look at credit markets
. p, U/ w2 b0 [* ~3 X* c# l Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in5 |0 ]8 V, j0 c+ A& h0 |$ ]
September. Non-financial investment grade is the new safe haven.
! ~7 h7 O4 ^ ?7 X High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
1 j3 |8 b: g$ I$ Z0 o+ }then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
. [- D% h# B3 l& _5 Z' wbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' N4 _ R/ e+ iaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade' U9 V% d+ O. @8 d- }8 w* N
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
' t# {8 F- _% q$ spositive for the year-do-date, including high yield.& b8 C% s5 G; i* ] ]& c9 T1 g
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
. r9 X+ H+ S4 _7 j T, }finding financing., ], \- x9 s; s) B& p9 i5 i
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 H$ j5 r. w8 H9 {
were subsequently repriced and placed. In the fall, there will be more deals.3 G/ s' o3 f( [4 S5 i, k _% x2 b% [
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
0 s5 t9 O# Y( z1 i' L: Z# qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
; a0 ]* Z# U$ |going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for- \% d0 {9 u5 q! h+ |' b$ V
bankruptcy, they already have debt financing in place.: N/ A; V8 r; w0 g, I
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain8 g! K" n# m7 Z
today.1 G/ ^ W8 Y# N8 g: Q/ A
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
, Y2 N' |5 A) R6 q& Y- r% i/ Semerging markets have no problem with funding. |
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