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发表于 2011-9-17 13:16
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Current situation
& y! ^8 w% o+ z) G4 H6 P& I The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& \# |; k, L! @2 d5 @as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
/ u- c6 ]7 p( o$ jimpose liquidation values.
V& G% y& k" A6 D" a In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
- c1 _# P& l. |; y& c8 @August, we said a credit shutdown was unlikely – we continue to hold that view.
1 E d% b3 e) T% ^6 u6 n# m( E0 j The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension2 X, S' A V$ s9 \
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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& z7 S. a# y9 wA look at credit markets
! f( }1 c9 i8 L8 A" C% M1 _2 D( \ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in2 p( F% \2 y" k
September. Non-financial investment grade is the new safe haven.% Y, j- C& \& q0 R( ~& F! n* } D3 O* C
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 z! d8 T- }* v, c C! S9 I- T- D: k
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1- I. ^3 V& p1 K% v
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have2 E8 M) M1 X3 k. Q- A! U8 \
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade. ]& ?: C- S7 c1 o
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are7 _8 O3 B' V" V3 j6 z& v
positive for the year-do-date, including high yield.& r' J3 C" p; r
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
/ N* Y/ K i0 Z* Q# G4 _2 W( xfinding financing.
& m/ c- @. d3 Q+ v8 K- ~ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
: ^1 i% B5 c3 U' {: K! c9 L2 O1 ~5 dwere subsequently repriced and placed. In the fall, there will be more deals.
" s1 V# l/ M1 o Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and: [, }! o3 ?2 h6 M9 W
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
4 W6 l7 s: q4 v' Q6 Bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for. w) k) l6 R0 I* [
bankruptcy, they already have debt financing in place.
4 n7 a& U& a0 F8 e& H0 H; g European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
5 i1 c8 s: x: V* o. }2 ^3 ntoday. z' ~; U8 N6 H4 n E
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in% o. n6 N5 S5 k, {
emerging markets have no problem with funding. |
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