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发表于 2011-9-17 13:16
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Current situation, m7 G8 ^1 n! S9 G8 w
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 u7 z- ?- f6 N5 L/ D% W; yas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 B0 n7 U: f+ v. o
impose liquidation values.( ^4 ^* W" |( N* h* _/ G+ T1 d
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In; }5 F( _7 B1 P' P
August, we said a credit shutdown was unlikely – we continue to hold that view.
( J6 L5 E+ \" V: }: z! [, e The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension1 L# h7 n" P8 Y* z
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.. p; Z7 Y( W0 L. v6 P0 u+ r1 s! w
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A look at credit markets, w- o5 Z% z- I2 `2 Q& J, q/ W" N
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- Q. ~. R% N) ESeptember. Non-financial investment grade is the new safe haven.
. t1 f. z. w2 O High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%" M4 O* K$ C+ Y1 z+ i* \: p
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1# U! E. s4 R, C- i" Q
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
. y% A; j" `1 y) x# ^. |* Jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade% C; a2 g; e7 p) p3 d% s- W
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- Q% k0 k9 Y: X1 o; z! y+ i6 c2 t6 fpositive for the year-do-date, including high yield." ]# B4 w' i8 y2 M0 i6 @) t5 I
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# w ^" J% L$ V: e
finding financing.
+ z; E P, D& C7 ^& D5 f0 U3 N Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
, d% x+ y }. k5 o; h, ~) ]6 v9 jwere subsequently repriced and placed. In the fall, there will be more deals.+ V8 P$ g. [/ X! u2 k1 H
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and8 ?# n: M r" a- z4 Q1 a# t
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were1 n! t: O# R2 }% c7 d! F- t
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& R6 @+ z4 l* T3 V
bankruptcy, they already have debt financing in place.
7 X- `& Q+ l! C European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain# k6 I) N# b* r) k1 q: R4 }
today.
. ?5 p& ~4 l }9 i Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in. J# K0 O( G s6 B I o2 B7 s
emerging markets have no problem with funding. |
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