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发表于 2011-9-17 13:16
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Current situation
2 ?3 V- P. X9 U g1 e; x9 } c The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long5 c; s4 Y3 {* y) B( k
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may) D1 Z" \; d A6 t
impose liquidation values.9 E# Y( z" g/ F5 |: p, h- I) p
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
0 Z+ r2 p" ^1 RAugust, we said a credit shutdown was unlikely – we continue to hold that view.
- c0 |5 F8 H5 w0 }7 A8 {8 c The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
( L( K7 T) d7 l' I# Pscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! W' ]; a& ^6 K, T3 D% \; j
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A look at credit markets3 N" Q6 Y5 Y2 P. t4 M$ p8 Y3 X; t
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in( o/ c# C5 Y2 J8 b. R
September. Non-financial investment grade is the new safe haven.. _; H9 V: `/ X
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%( K& V. W: n. W
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1" [0 G- {1 B: b" Z8 ^
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
# P2 ]6 ~9 ], j6 A) zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
! A$ M' t4 |* m' N% Z$ O8 }CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
2 i" t4 x! B) u6 _+ Kpositive for the year-do-date, including high yield.- Q: H% B; k+ H( \2 ^# h
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble. f. \% `1 D, p- F
finding financing.+ d8 L" `3 l; h) ~0 J; T6 q
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ z- B6 E6 g* z* l) O: Owere subsequently repriced and placed. In the fall, there will be more deals.
1 \' _. I$ t |! f3 I+ L Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and) C, P* \$ M4 x1 q4 x
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
/ a4 m: f6 ?( v5 h$ ^- i. m6 ygoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
8 R$ H- s. u% A: b. i- X0 Abankruptcy, they already have debt financing in place.# ~+ [/ L3 W N7 `, |1 t
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain+ [9 \; Q6 z, v) \( P/ R( d
today.
1 v6 W6 @ u+ }9 W; K7 j5 h; D Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
% q9 i/ ?3 n& [9 m' Aemerging markets have no problem with funding. |
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