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发表于 2011-9-17 13:16
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Current situation \* c" z# K5 f
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, e9 T# p; ], m: c Z, u- Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may5 a$ X7 w( ]0 N
impose liquidation values.
1 R7 v$ v5 i) R( H: q3 _ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
- {7 L( Q: T( [$ x3 N& o9 yAugust, we said a credit shutdown was unlikely – we continue to hold that view.. U1 G+ c* A4 r9 I0 X4 B" X* k" O: d
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 u5 i1 K3 w9 f3 E! Gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
; E0 d& q3 O5 h. \, ~+ I Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in/ m, h% }- P9 U$ `; ~
September. Non-financial investment grade is the new safe haven.9 i! Z1 S* H# b/ z
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
3 h# w# F; b0 E3 F6 o( @7 xthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
# B5 B# C3 l3 ~" X" y ubillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have+ z- I0 o; A2 R
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
4 a6 w0 X: |$ a# ZCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
3 Y* h- i" w" Z7 B- Mpositive for the year-do-date, including high yield.0 p, ^, {0 o( C5 ~1 ?: n8 H. i( ~
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
. o$ A+ i$ L* s; v) l6 tfinding financing.
1 T% O7 E% X; W3 z5 A1 n1 m Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they4 Y# [. F/ _8 a# J3 u& z
were subsequently repriced and placed. In the fall, there will be more deals.! g7 ]5 X! c. X9 ?( X; {
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ j; G0 ~ {/ d: _& T0 n
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were. A! |) j. n) Z j6 c: C
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
# |* Z5 T, W; X% Kbankruptcy, they already have debt financing in place.( Q9 `' I5 m( |% n1 E4 W5 Z
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 Z' a. m1 f( s8 pemerging markets have no problem with funding. |
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