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发表于 2011-9-17 13:16
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Current situation
: o7 k( ]# n6 X, u The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- m) \: S1 r+ H8 [0 i
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may- Y- G/ Q+ b& ^/ |$ H
impose liquidation values.7 \& O- A5 C: \) P" b: i
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
J, `% ?- a! ?+ UAugust, we said a credit shutdown was unlikely – we continue to hold that view.
# l, H# ^) [; G# s The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' E% T5 N6 _; | A3 u$ j% }4 G
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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. H: n# V* h+ a# E0 @! @+ C5 gA look at credit markets
* B& y0 |7 S& O4 K+ W Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 E |/ i5 E5 K( C& t! \' Y, B
September. Non-financial investment grade is the new safe haven.
$ e5 q1 ^: T6 I% W9 h, _ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 ]: L. \4 }( t- u( j7 m& [
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1! l& Y0 B; @5 e( {# \" `
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have2 r' P/ L( v. ~
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
* Z" B1 J' I& Y4 i0 pCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are( N+ J/ r4 {, {' f6 y
positive for the year-do-date, including high yield.1 h5 h% r8 F( I$ _6 v% f( O
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble8 _6 e, d9 q! q
finding financing.
! D; r% c0 D C0 _& s; m Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& h( O/ C4 f) D) h) Gwere subsequently repriced and placed. In the fall, there will be more deals./ g5 Z1 q4 d1 c/ M p# ^
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and8 U" W! O% B6 s$ l
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were9 ]4 i2 p0 T3 }& `5 _
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
4 A! Y" q5 @ O3 q+ s5 Ibankruptcy, they already have debt financing in place.
$ \: J! i* E6 O/ W: ^ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
# k9 m k! v$ f/ D Jtoday.
/ Z5 d) v$ U( z" w, p Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in& E7 T- T) o9 W! B! p' g) S. i
emerging markets have no problem with funding. |
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