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发表于 2011-9-17 13:16
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Current situation
) z8 P V6 L2 Y1 l4 u8 D+ ^ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
, E+ c& s. m$ T# D0 Oas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
8 Y6 G+ J+ v1 y6 |$ Z) qimpose liquidation values.
; Z& i9 o( W+ U. ? In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In% r) m# i7 s, |; ]9 a" I8 [
August, we said a credit shutdown was unlikely – we continue to hold that view.
. K7 G1 L9 G7 Z1 O The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension2 B/ g3 ^: M4 C/ M+ M4 p
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets., \5 b6 K" e2 u9 a$ p* u
" {& ?5 D3 ^* Q7 ?A look at credit markets% Y E6 ?3 O8 C; r! m+ x- e
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in: o- n4 i1 R" v& R2 T( g
September. Non-financial investment grade is the new safe haven.: Z3 u( `$ l& o+ n( g
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
, P! Z! g0 @5 D1 w% m1 R) Jthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1' H3 l8 G& o7 B6 ?
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have0 f1 W8 P* a- z6 \
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
7 A9 t% d% W4 S6 bCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
6 Z+ v- |. z% V+ x; mpositive for the year-do-date, including high yield.
/ e1 F ^5 P/ P* K+ L Mortgages – There is no funding for new construction, but existing quality properties are having no trouble) C/ o! a/ F- @, w4 o( u; {& I9 f( a
finding financing.
! g9 `: O) m. y$ {* A( e- a( T0 V Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they3 v0 \# u d# _
were subsequently repriced and placed. In the fall, there will be more deals.
0 i3 `+ R' h0 K+ a, W, {9 h Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and g+ _/ E) _4 i
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
- H. v! g% w5 `: f& F$ egoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for) X" `: H1 R) q' t' d% h7 W
bankruptcy, they already have debt financing in place.
! L R3 X+ y% h0 ]# ]/ {5 T European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ B8 i& x* v g. j1 r
today.# V6 G8 ?! v/ o1 l" |
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' J: E i" E$ p# ]# O. q4 Femerging markets have no problem with funding. |
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