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发表于 2011-9-17 13:16
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Current situation
# T( X+ e* s9 W* c The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
4 b+ \+ Y0 W% I: ^) J! P9 J6 Was funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may# b; j- ]" ?. H1 L3 w' \
impose liquidation values.
* r; k8 s# ~$ o2 j- x) ]5 f In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
1 ~. x9 I- | _" cAugust, we said a credit shutdown was unlikely – we continue to hold that view.9 k! ^ v0 l$ U$ R4 a' a8 Z( \. v
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. w3 E& n4 {$ B& iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.4 s0 T( r, I/ s# ^% X: K, s7 S# X
+ @0 i4 o$ W! g0 s b$ WA look at credit markets0 R$ g* o# A( l3 q% s4 d4 R+ e
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in6 v9 a1 E+ a- B6 f
September. Non-financial investment grade is the new safe haven.
F* u b/ D0 k High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
; H/ C5 _/ D3 V7 Y4 s. ]' S d& \then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
5 D' `+ a0 Q% @ P$ G0 V0 | _2 ?billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( j: E5 m6 C* u' E l
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
) Y2 C0 e& R( b B$ b+ a% x5 o" pCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are" q7 t4 K7 Y# U/ V6 z! C# a
positive for the year-do-date, including high yield.
) O9 N! c o: t. \& U2 W Mortgages – There is no funding for new construction, but existing quality properties are having no trouble& B5 d+ v* v& A. E/ Q, ]5 l; T k' |
finding financing.
* l% S& D: E# A/ |( E# R2 P Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
' x2 `) {) ], I- N; bwere subsequently repriced and placed. In the fall, there will be more deals.8 H8 w& ~3 ]+ t$ M& c1 S
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& B6 B: T4 H' Z' {0 w' t! R1 L O
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were$ c8 p# G! U* C: X" w4 c; K
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ o4 l, P" z" o" h+ H5 @+ Bbankruptcy, they already have debt financing in place.
& S" _3 f4 }7 c8 i. _ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain& ?" Y' {7 p% n* ~
today.
; w; A% h: {3 ]' \7 z W% N6 |3 _ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' j0 q6 {0 q% ^5 uemerging markets have no problem with funding. |
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