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发表于 2011-9-17 13:16
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Current situation
6 v0 C' m1 D! w" b: z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
- Y- o. `4 W* nas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! ?6 P4 |* j/ j, V2 [% t, fimpose liquidation values.
" p) q( z. ]! w; @7 W, S, } In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
% e3 ~& N& H% N: J! U( kAugust, we said a credit shutdown was unlikely – we continue to hold that view.
! g+ G a# E8 K* x2 U& [( q The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension) V* r. E, @& O% Q1 Z8 l) a
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
8 m, Q5 Z; k' Y- U7 D C5 Q9 S- R6 Y+ G6 \& n3 ~
A look at credit markets4 ^ X6 Q5 M- N z# x& ^
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in$ \9 H2 m: P1 t F, ~
September. Non-financial investment grade is the new safe haven.
, ~7 L4 R1 D6 q: E# z2 _8 ` High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
" [) q, d' Q& R1 u3 e2 X4 ]then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 d5 @ H8 t+ P# h; m1 r
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have# w A' h9 j' {! ]
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
: D! Y& k3 L/ ?& h' j! h# b2 uCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; ~ Z6 P2 A' t+ Wpositive for the year-do-date, including high yield.
: f& K/ h: [+ C. ^8 } Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: E2 R: N% u9 d" O! q( k8 Y4 hfinding financing.$ D4 t4 o, x/ q
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 D" V6 E9 \0 R3 bwere subsequently repriced and placed. In the fall, there will be more deals.0 w2 O7 m* m7 \9 e. a
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and) i6 }! a+ i( l* {" N; O
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
* N! k" I) l0 N" U6 v! cgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
; X5 ~" n2 {, C% qbankruptcy, they already have debt financing in place.
( E8 f/ ` I! ^6 e: [1 i" I European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
" }. m! B9 X4 x2 l$ \. k; Ftoday.
" J) k" I V( |/ C; A+ d Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in; s% s6 M9 q' @- u
emerging markets have no problem with funding. |
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