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发表于 2011-9-17 13:16
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Current situation
) l3 |' |' W% U, L( d5 X+ L The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
: S0 V Y- b4 f" i+ was funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
' M3 t$ v7 N3 u* g8 D! C3 dimpose liquidation values.6 y5 M+ V/ e% {0 P& i
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# N0 y+ k# ^+ t: h7 J6 LAugust, we said a credit shutdown was unlikely – we continue to hold that view.
% t; S7 Z7 q5 v, F% q4 C: I The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
( U- p7 J# S/ \' I' A' wscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets5 g: R$ x3 ]0 A/ z) ^3 e4 V6 P
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in4 v& e5 K4 h" o1 q. C: H9 N
September. Non-financial investment grade is the new safe haven.; x& x/ M" D7 m5 t. Y8 K1 k
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! e6 \& Q3 M, c( X6 j% X# G2 B
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 i, Z9 p Z% ?+ U+ \
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 |! u2 {9 J, \. W7 kaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade5 `! L8 w9 R+ a& O: L0 r
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are! v& t8 n3 Y4 r* L
positive for the year-do-date, including high yield.
# v- A% P% c# f6 j w# {: W% F- o5 b( X Mortgages – There is no funding for new construction, but existing quality properties are having no trouble) v: H- @5 H$ n
finding financing.
, k6 H" ?: i' L4 H Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
: \+ Y; C5 O& t0 I+ F6 t/ e) x, Ewere subsequently repriced and placed. In the fall, there will be more deals.
T4 @; R+ L" Y. O4 M Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and, `. C! z/ l4 ^ @
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were" i- j2 s* i6 \& f- h# y5 u0 f
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& ]* j4 d+ G% m- R5 ^. q8 c
bankruptcy, they already have debt financing in place.% G: d5 n3 X9 t% A& |2 B
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain" p, P. [+ d6 d4 b4 q" X
today.
% p/ k. {( D5 t# t Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
, G" I9 Q- M: ^4 remerging markets have no problem with funding. |
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