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发表于 2011-9-17 13:16
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Current situation
' O: ~* H$ \/ }3 G2 l$ d" \/ Q The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 c. s! f& X- a" d3 v7 Zas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 a' o0 Q0 b- q: Bimpose liquidation values.& T& B F4 Z/ j* P3 N" E
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
9 ?/ O/ }. L, e! GAugust, we said a credit shutdown was unlikely – we continue to hold that view.5 N3 ~; ^ T& h8 i) }
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension# z& |' w6 I- c" k L+ s- R! V
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets9 I- o- J7 }/ w8 f" A
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 t, }" o& ?: [% N- K+ {; wSeptember. Non-financial investment grade is the new safe haven.! I1 y4 z( N" V# `
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
1 A; h0 P6 N4 j2 q! ethen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
# \ F1 ~2 M: u. N( J6 J4 i) vbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 ?0 I) {# M A
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) {; {+ V" x: S' e2 T
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are9 c: A4 d) ~8 D' K; i5 i L
positive for the year-do-date, including high yield.8 Y4 `5 h3 Q- \" i$ m
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble5 f$ g4 s3 C0 I1 Y4 z( Q8 N
finding financing.
" e- _- Q }& g3 B: R: Y' ]" K3 I Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they# K& p. e5 Q8 f c& M
were subsequently repriced and placed. In the fall, there will be more deals.! U3 c& c# w- h. @1 Q! P( l+ i0 K) Y' w
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and9 D A+ r+ b- U0 v
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# q( ?9 l6 K1 j
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for: g. Q$ P2 ~5 {( i0 s6 O1 L
bankruptcy, they already have debt financing in place.+ ~2 C5 M! ]' }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
4 P: z- p/ V. X- ptoday.
1 F+ Y6 ]3 j! n Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 i5 a9 e( q4 f; Y7 \emerging markets have no problem with funding. |
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