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发表于 2011-9-17 13:16
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Current situation
8 B3 t1 } \, U. H0 |) h The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long ~( M& I" }+ G1 ~
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 r9 h6 M- Q% f5 j6 M
impose liquidation values., ^/ f% H2 q; p5 V8 \: v8 e
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
( A6 Q# c+ d( L# `5 u2 zAugust, we said a credit shutdown was unlikely – we continue to hold that view.! ]- f* e9 @0 N5 y, a9 C4 j0 j8 H" Z
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* q6 S& n, }3 ?: q
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( B+ d3 u7 b: E( F, t, V7 i
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A look at credit markets
' h3 d1 F4 d. ]9 W0 G Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
5 y* t2 l- R+ h; R, B; CSeptember. Non-financial investment grade is the new safe haven.- ?* j ?2 X* K, d- s
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 F" M0 J3 F) v5 q y
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
% n3 o: ^- P# |2 d, z# m. Zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
: P" Y2 J W! f# Zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade, I& Y3 b4 x$ x4 ~4 W
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
1 B& F; `: @( K9 `positive for the year-do-date, including high yield.
( G' v( J6 Q- o$ S/ _2 Y Mortgages – There is no funding for new construction, but existing quality properties are having no trouble( Y. e6 V/ F* x8 |6 H4 m1 `
finding financing.
8 D& U4 f0 K7 U' f Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they) d+ P# w! I2 M" P- O# Z1 n: d2 s. R
were subsequently repriced and placed. In the fall, there will be more deals.
5 U( h$ R& U! R$ J, L2 B Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
" [. ^6 h' ^- |: W0 jis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 L9 Z) A5 b. o4 C4 o( A' ogoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for$ x4 D" B" D( h6 t& |
bankruptcy, they already have debt financing in place.
4 T5 w5 C6 H2 o: ~% L European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ D; y3 J4 t* J& d5 Z# ^
today.! H8 N; T3 g7 D: W0 d" X* K
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
( I u' R$ \- t( L$ ^' vemerging markets have no problem with funding. |
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