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发表于 2011-9-17 13:16
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Current situation% n' D, f6 Z# [/ X, R2 s
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
) { K! S+ e7 b; das funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may( V3 C |7 t m1 N2 K
impose liquidation values.
0 Q) x% d9 {1 A0 Y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In2 G- C( k6 K5 S# `* f/ W% T
August, we said a credit shutdown was unlikely – we continue to hold that view.% ]. z( [4 w& r. a
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
1 m, p1 N% P. G+ a+ S! Q2 C2 _: y) Vscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets7 y* X2 X+ L- E9 i- D L
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
; \ u: s) V4 d' M& j w8 E7 }5 {& k4 WSeptember. Non-financial investment grade is the new safe haven.
& i# [ I1 H' B! S& ` High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 G& i4 h1 x4 y; Q$ Z/ p$ h8 j5 Q. P
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $12 C$ j* e: T4 ~1 z% s
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
& o* J+ G& q" A S) y$ aaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
6 ]1 O; D% F# Z/ V1 ICCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are3 T! D% R9 p* \2 D% {2 ]
positive for the year-do-date, including high yield.# b" y% q# Z/ c+ Y! F$ s9 C
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
7 V! c s' Q' |6 q7 kfinding financing.
+ F' ~6 [ U* ^; t Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they* a8 T2 l3 v' _- ? e
were subsequently repriced and placed. In the fall, there will be more deals.
5 C# F# h" F0 V Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and' V' v) w9 ]0 t+ E) _
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
( Q/ b1 }4 i. t2 G8 T; |# _* Cgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for. J, Z/ \+ ]9 J, t
bankruptcy, they already have debt financing in place.
1 f1 Q) C6 U1 G European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ d: |! b6 T; a7 B. W
emerging markets have no problem with funding. |
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