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发表于 2011-9-17 13:16
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Current situation: K" k$ X" j. |7 c9 P# b
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& p; y _! g4 F: r- L3 B4 C
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may0 A" l! V, z" N7 k! V0 h
impose liquidation values.7 I+ g4 f' p$ y6 `
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
& N9 ?- x" C- n/ ]August, we said a credit shutdown was unlikely – we continue to hold that view.
( F; V6 \2 @/ T& v3 F5 p+ ~7 U The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension3 w1 t" w+ o3 n4 G X' V- r1 S
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.) O' z: ~' ]' o
( r0 a( h( `/ G. i6 {: r7 hA look at credit markets" @* j6 \7 ^4 r) e
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in5 {+ o/ T$ I+ b0 h9 i
September. Non-financial investment grade is the new safe haven.
; I f3 P! o/ c, T- D# {' y High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
) k5 s( E6 o4 f) x: u7 K0 x6 M% Kthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $15 Y3 P3 r7 g' ?; e
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have7 p3 J5 D+ m% u! `. E% B y
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
& w! _8 Y0 Z V+ r2 tCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 }: _% n" N# j, i. i& Lpositive for the year-do-date, including high yield.
5 m# Z% J, S1 g9 d! _& @ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: J% E* ^. K8 @ d3 R- {4 ~6 `finding financing.
3 H, T# z0 D7 y4 c6 P3 ^ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
# k& W% n- @) k5 Z! ~! `were subsequently repriced and placed. In the fall, there will be more deals.5 l3 Z( S* a8 A' d/ e! D$ p S, M
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and3 G- W$ N/ d* U1 b6 d* v- Q' @6 Q2 t
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ `1 N" \6 Q. L. g4 Xgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 r5 ]; m6 l1 R, M/ J O! l
bankruptcy, they already have debt financing in place.3 x9 G& V4 Y! V3 P
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 @4 Q: P+ y5 S3 b9 Ltoday.
% N" B1 e" x' C! W. G& @$ X; V8 n Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ v) R6 K4 f( M/ ~2 f
emerging markets have no problem with funding. |
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