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发表于 2011-9-17 13:16
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Current situation0 b( M$ j# C! E2 p1 [; L2 W' [
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
, U. h0 m4 q* C) ~8 F+ D# S# K }1 t8 k$ \as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* e% M. F4 J ^/ }0 D( k* ?% D
impose liquidation values.3 C: j9 J3 O$ @/ J
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In9 D9 r# C' x3 L# \( X
August, we said a credit shutdown was unlikely – we continue to hold that view.
& X* o& L% k9 }8 ?8 c Q9 Q& ] The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 u9 n, a3 S# F9 ~2 j, ?
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
- d, A) d2 x+ {% w8 _! } Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
' y* ^/ l6 ~- J9 `9 j2 @September. Non-financial investment grade is the new safe haven.
8 r+ r0 j0 k& O' S' J9 p6 z High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%; t& ~* A D( M) ~; y3 x9 m
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1# U/ S Z [( m/ T. F, y' p+ h: A
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
3 n6 Z# H5 I" `access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade" p7 J2 A& z' @) D/ V3 h. v3 D
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are l$ V1 K7 U* R) f2 b
positive for the year-do-date, including high yield.) C" F7 K* c3 \% R
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ c( e, n& @% U0 J- A: m/ k( xfinding financing.* I% m7 @0 u1 r/ A6 x# j, F" t/ D
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& X$ `+ F, U# W" h4 Q7 ~were subsequently repriced and placed. In the fall, there will be more deals.
1 P y) p7 A5 x( ]9 b8 D; k Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and- z3 U3 W: x& O7 X8 j- k
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were- Q$ S2 O: @# V9 i
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for! d5 j$ W9 m/ v; \; `
bankruptcy, they already have debt financing in place.
: j) d4 m0 S7 l! }- v4 f European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain! K! o8 ^2 F% ^* [: x9 J3 u
today.
9 H) r7 N @6 e# w Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in3 j y/ R+ p% N, q- p. c' e
emerging markets have no problem with funding. |
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