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发表于 2011-9-17 13:16
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Current situation
) a' t# ?) W9 q& i$ Y) H# h The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: u& Q: C/ T8 K) R* M
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 w# {: N5 z$ c8 i/ M% Fimpose liquidation values.5 n y2 A# l" }" g( H# }, O, q
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In5 t, ]2 T' E: n1 c* [& E
August, we said a credit shutdown was unlikely – we continue to hold that view.0 k U" A: G; u9 o/ I4 S2 u
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 {' c& ?& Z5 s' G) s. A9 E0 m
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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0 L( T8 H) G5 h) S4 R2 O0 PA look at credit markets3 _$ S- M/ a7 h) i. r
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
1 |$ o9 g; P' u5 ^+ {9 w9 bSeptember. Non-financial investment grade is the new safe haven.7 k7 o- |8 ]2 l3 F3 P1 T- O5 _
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! \( L% G! y5 X3 U3 A/ n7 y1 Lthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1/ e8 b' o3 j* \8 F; |. |$ _) @
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have9 f$ Q Z7 d W. ]8 |$ T$ c3 o0 h
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade- H3 D- l/ X4 Z' N; Q; T
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* W" Z3 i: n1 I9 |! r% e
positive for the year-do-date, including high yield.
0 g( w' g6 O1 E0 E" u7 K. n Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# M8 p4 Z" G! K; S# B
finding financing.
" d5 z2 A, a9 r Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they8 D. b/ ~1 @2 d7 l
were subsequently repriced and placed. In the fall, there will be more deals.+ p6 D& I# K* ^9 Y& d, Z% o) J
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, L5 f5 v/ L8 Fis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were. e8 M, y2 X& v. }
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( l& n( x0 ~4 O- n3 K$ D& sbankruptcy, they already have debt financing in place.2 ~$ ^7 H( v) T9 h6 A: x
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
5 G D7 z8 w0 r$ l, u4 ntoday.& t4 {! j3 \0 s6 o; A
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in% z4 x* h8 A8 X- I P" a8 R& _
emerging markets have no problem with funding. |
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