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发表于 2011-9-17 13:16
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Current situation
, P& e) m4 e! t; u! X* d8 a# ] The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long; L: u$ a6 y0 I A4 x! a1 @6 ~+ P
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may" z. G9 t l- L. n1 M
impose liquidation values.
2 M! Q) g- p6 f" H In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
2 h- B& \* m, M# G4 k5 {' QAugust, we said a credit shutdown was unlikely – we continue to hold that view.
* Y5 K3 y6 L1 x$ p* h; R The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension4 `% q# _* ~ D% H% u
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets., J, s7 _# A- C; U% q
$ E4 k/ M* S7 o4 tA look at credit markets
L A# p3 M2 p: g, ]- U$ [8 | Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
G& j) j/ D; G# _; u) kSeptember. Non-financial investment grade is the new safe haven.* e1 O/ J3 F. N2 m
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
/ b+ w$ o" I/ C [: w2 W' D5 hthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
/ \2 p! ?; w" ubillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* Q0 a6 L5 V. R) X, [3 eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade* r4 |" o' h2 m3 }& {3 }8 t+ p
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are2 `% U: k5 Q o$ `0 D; H
positive for the year-do-date, including high yield.! Z. ~! @, @! J1 k" r1 K
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
5 j8 \% a4 x& ?/ m. q. o4 L! u9 wfinding financing.
( v% K0 U9 j4 S9 X `5 M/ w Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they( I+ c! j' a1 U: O, K
were subsequently repriced and placed. In the fall, there will be more deals.1 t! Q# W- O6 C8 j/ c0 Q, {4 ?
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
; ]& |: M v& W7 gis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
( ^! A! [6 e2 d9 E$ cgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
* ~: N$ M |! N c- k. Q6 X- jbankruptcy, they already have debt financing in place.6 K1 d3 t' F& V! R T% G+ B" f- [
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
8 R6 ?! y( Z" M \- ttoday.
' w7 g4 d& J% x2 d/ S; Z, M Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ h: T6 s. A$ X+ t
emerging markets have no problem with funding. |
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