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发表于 2011-9-17 13:16
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Current situation
& `- C4 H% b3 Q+ }$ S5 U0 s9 ` The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long" f: Z' e8 H3 |! X% l5 I
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 R7 [4 }3 u' q0 v
impose liquidation values.
% U& y g. {+ u9 y! h4 b7 g, l In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In6 r( p4 [4 r" o9 ?
August, we said a credit shutdown was unlikely – we continue to hold that view.
- _- u9 q! o" M2 B* Q The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 Y( y6 b6 C5 w0 _scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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1 f; e& k1 L' X: ]8 ?" vA look at credit markets" Q* h8 Z3 {# o4 u c' u
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
4 I0 e& q$ ^# O6 J2 d; wSeptember. Non-financial investment grade is the new safe haven.
) I4 y. A, P2 V& D+ Z: |4 ] I High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
: Z: b( L }" z& ^% ?then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
4 w9 ~, _' E z; K1 ebillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have# Y6 I! r+ r5 O u I! e
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade" P4 z {4 v. z, Q& B6 {! c
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 s1 L' K) a/ h9 {) b% b' }positive for the year-do-date, including high yield.
, G% E4 g% x! H, k g8 D: Z: f Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
* @* Y% y$ C; ~" u. C/ W/ ~finding financing.
+ J8 Z3 f* P$ ~ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- G! ?0 G7 C @4 l6 [0 z# m
were subsequently repriced and placed. In the fall, there will be more deals.! S' Y0 }/ n0 N E
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
7 |3 F, k1 r% l6 Wis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
, ~0 x7 b; O5 e/ K* Wgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for! l* h6 c4 T! m' ]% f
bankruptcy, they already have debt financing in place.2 E2 S8 P$ A t8 l# }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
0 X# B7 q# h- m5 D. `. Q1 i2 q: Ytoday.
4 L$ j; _/ a! L5 Z0 o, g Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
- M9 b' Q4 I ^' r: i% eemerging markets have no problem with funding. |
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