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发表于 2011-9-17 13:16
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Current situation
: \, z7 t- N% h' N& o( B% m The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
- P0 U! j2 `/ X$ ~2 A" p# Kas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 p* m: E' Q, w9 |5 p& \2 C
impose liquidation values.
4 Y- C: @( e& a In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
; K7 T: Q4 q, o* b7 D) y% ?) kAugust, we said a credit shutdown was unlikely – we continue to hold that view.; [, J4 A$ f1 z4 o# [( H
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension1 U( o8 b; B4 j- U1 u7 E" u
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.9 v; t; u2 \$ S8 W2 r! C
( l+ z i7 |. N8 QA look at credit markets
* t8 K9 q) k% X& @ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
% i; n# f5 j8 Z! g- d' b/ GSeptember. Non-financial investment grade is the new safe haven.
* u% [2 X7 H& {! Q- w High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%+ O2 ~% A8 a3 Y3 P# c, f9 E0 z) [1 a9 v
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $10 d6 P7 [; Y8 W: b. P% v2 S" |4 F
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
. \$ e( D4 `( Z. Z4 daccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
$ s- y5 Y5 b# x& X' d5 `1 tCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are) L) V" I" w, I4 ~' i. E
positive for the year-do-date, including high yield.
+ o6 K0 M C; k* U" t' v Mortgages – There is no funding for new construction, but existing quality properties are having no trouble- f4 c2 {; ]) J' H* C+ h
finding financing.* ^2 N1 v" [4 Z; I3 | w
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they1 V2 \7 l" x/ T! d* U0 X
were subsequently repriced and placed. In the fall, there will be more deals.
* V$ ]& b; G: e Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* n9 {& z# M3 F$ y. T
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 Q7 O* H) P5 g" r2 K& F# ugoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
- V3 }7 G% C& V4 d8 s. z" bbankruptcy, they already have debt financing in place.3 X' ?; b* }2 u
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ m$ I# w& r$ t. E
today.
, Z! K5 [0 g$ _/ A1 T _8 \8 f Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
7 u$ V! W9 P# q5 h1 K& [5 vemerging markets have no problem with funding. |
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