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发表于 2011-9-17 13:16
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Current situation# G; j& w2 r+ a( B5 ]
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long( k" Z1 }8 u% g( B n" v* t
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may, q/ W( H9 X* o n
impose liquidation values.
9 I. a: i5 Y/ _, Y/ @ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In5 ]1 V5 G5 G) n; ]& u, _
August, we said a credit shutdown was unlikely – we continue to hold that view.
. H7 c8 p/ A& O0 g/ T The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension: X, C K: A" j( d/ n. c4 R: Q
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.. ?. D7 ~# Q* q% ~. X- s
4 a; H. E" T: f8 lA look at credit markets
+ d7 T* W" ^/ S- {* i# x5 e% X: M& P Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
% | a' D0 P: r, k V8 L3 M7 \September. Non-financial investment grade is the new safe haven.- g- j @! q1 M3 m6 B
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%* C" W2 t# l f' n/ U
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
3 L- N' F( I" [' a' m9 j' bbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 d: b ~' x% ]% `access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade' }- ~1 { l8 ^7 T
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
H0 o+ S' F! y: C0 Wpositive for the year-do-date, including high yield.
2 l9 Q) h. f# @) W: ] M Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
9 M* ]0 y! m' |' _/ A; }finding financing.
/ s% B0 }5 a* x( e" I Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 s/ A/ X6 Z5 `2 M! nwere subsequently repriced and placed. In the fall, there will be more deals.% u6 a4 G" Q% G+ J
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and; D% G4 U0 a: s! }- A
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. ]8 F- h s# R0 Q- ?9 @going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 f, |6 R4 P; K; \' \( p
bankruptcy, they already have debt financing in place.! T z+ c; Z! ? M6 t. q8 N
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
* n9 p4 W' j: f- W/ a6 W, `- \ htoday.
6 D Y; t. R3 e! t Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
# }+ d8 A: B( Y1 D6 r2 lemerging markets have no problem with funding. |
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