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发表于 2011-9-17 13:16
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Current situation- M4 x4 q; K# J$ V: W
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long; L/ N& s3 o. Z# G( d4 E, z; g& P8 r
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
2 _7 ~* Q0 |9 C* p) Uimpose liquidation values.
; w7 t$ `6 q6 c c In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In$ R- j" a, x1 \
August, we said a credit shutdown was unlikely – we continue to hold that view.
! a+ c8 c: f# ?- D The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 L7 H2 ~$ V1 ?& T! b. K9 D0 Sscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.2 v4 \ H x$ h0 L9 M
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A look at credit markets& S4 m7 \. f# `2 g4 I
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in/ K5 W4 N! `2 w+ l @
September. Non-financial investment grade is the new safe haven.* g" L+ u3 A& G- R3 f1 A M: h
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
9 q( o9 ]8 i3 ~8 D+ \then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
! H' B% f; s/ I/ N: e' k/ ~" a1 kbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 i w2 R- L A1 o, V8 C$ iaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
( F+ o) f' {- b/ N7 c$ t& ]9 | PCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are& z7 p9 D* S( k" \* a
positive for the year-do-date, including high yield.
: x4 ] U: e- z( i8 y9 g+ e* ? b Mortgages – There is no funding for new construction, but existing quality properties are having no trouble7 {! Q2 B& [8 s- k: _
finding financing.8 ^! X( v t u' t
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
' A6 L! R8 Q, J: iwere subsequently repriced and placed. In the fall, there will be more deals./ {9 D8 y; B& b
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
1 Z1 Q$ f5 {7 {7 g5 Bis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were- W# C- S5 Z) ~& _
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for0 q& r: p) Q5 k6 P* y! B
bankruptcy, they already have debt financing in place.# p; _8 @- y) i; y
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain- f7 f1 }8 b! X: C5 d5 e
today.' a1 J+ k2 z q& f" D
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
* |' T- F( N0 T' D+ n# m; eemerging markets have no problem with funding. |
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