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发表于 2011-9-17 13:16
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Current situation
) U5 e q3 v0 |! W/ b, u. }" ~1 e1 w The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long# x- d! e# j6 A9 E1 E7 p
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ g/ ~+ K: m R d9 Wimpose liquidation values.
4 _1 V0 V& ~" `' D In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In/ s& G" W& }: e: x, H$ e
August, we said a credit shutdown was unlikely – we continue to hold that view.- D: ?/ ?. t! ^
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
2 @) q3 B5 I" ]+ v4 M! U- l1 gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets. f) O; y! Z& z) Y1 T* \" C% Y
( q9 ^& U3 W% m7 H* I2 I
A look at credit markets- w' s- h" k0 t( O, k
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in# ~+ y1 q4 V1 \3 u" ^
September. Non-financial investment grade is the new safe haven.
* i" C! Y% R+ d; d High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 u9 F D& z; w1 I# y j( p
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
' @( B( r: o1 Ybillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have4 o0 y8 w5 P* t; s4 B
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
% @; u' C* A* J B3 T6 O1 hCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are7 D" z5 D1 K- R) M
positive for the year-do-date, including high yield.* u; F2 y7 y4 F. o2 E
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' N% k8 T6 X# mfinding financing.+ n& p4 q* n5 y/ I' c6 k
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they$ @$ f( p/ W0 g F
were subsequently repriced and placed. In the fall, there will be more deals.
6 } o1 {1 K" ]6 I( P: h4 m% f Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and5 ]5 e h1 x' @1 C/ L/ @( B) g
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were* b, R U, }2 U, n3 L
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 d, D& A& V9 s6 x$ t
bankruptcy, they already have debt financing in place.6 @% }* a4 t) ~3 q; t
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
* z' Y) ^: C" i: p: _0 d# |today.
" M% v, X! w, F. G( Y7 |9 b Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- c9 ?8 w. Y2 Z7 N' a
emerging markets have no problem with funding. |
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