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发表于 2011-9-17 13:16
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Current situation0 q+ b7 W6 v, ?% O8 L3 |& h
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 S: N8 [# u4 R0 ?7 x% V3 l' qas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, [, L* X+ t0 W" l: Rimpose liquidation values.
. b1 s: C2 D% K' p# c9 C In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In% ~& C [3 q# M
August, we said a credit shutdown was unlikely – we continue to hold that view.
/ v0 e4 c* ~" R+ V/ } The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. H" B% a K( U, c! Y5 E4 ]scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.) F9 F* g, ?& i! n: c8 n% }
6 M$ k4 r) m8 _/ S# tA look at credit markets
3 I' y/ M+ [7 s' Q Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- V$ d) \+ n4 }* o2 E$ X. CSeptember. Non-financial investment grade is the new safe haven.
! x& b5 O- l* j9 R High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
% B$ x' k9 m; }! Lthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
5 X: t6 k. m7 C/ S7 r& a' kbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
9 X' d: {4 O3 S5 z8 ?access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
6 j4 Y* T# c8 rCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 _ D* H) F" ?6 Upositive for the year-do-date, including high yield.5 g. @1 b% U2 M* ]; ~& M9 I
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# c8 b+ c' a' L& a# ~8 O* x
finding financing.3 ~' X( z# H& L7 t9 Y+ u7 ]
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
! ^1 O* z& K! Fwere subsequently repriced and placed. In the fall, there will be more deals.5 u8 w s5 ^( M
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and9 O' ^, x# N/ b0 N, B
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were9 j" ?0 m/ Y9 B% n @2 H* k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for3 ~8 f& S. U1 I1 ^7 y7 z3 k
bankruptcy, they already have debt financing in place.6 @8 e% E) A7 H) K$ }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain: Z# N& n' H0 _+ V9 a: a9 |
today.
( ^& i7 M/ T$ k Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in1 w: G2 x. D. J; ]' W8 K& u: P
emerging markets have no problem with funding. |
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