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发表于 2011-9-17 13:16
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Current situation
( d% z! C; U1 j: M* d5 u$ ^ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long" @. D* h# h( I
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. N" W0 U+ e1 K* {impose liquidation values.
% P4 w! F; X1 A: ] In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In0 X* g7 m( B M4 U
August, we said a credit shutdown was unlikely – we continue to hold that view.: y! i; H& K, \: l* Q; m. c
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
0 ?( @& J( m/ D$ I: H$ I0 ?- Tscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
8 W# {& U. l; \3 z Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
+ Q) M7 l" k% Q" SSeptember. Non-financial investment grade is the new safe haven.
" d( f( y% g) {, e. [! T High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
% A; B( Y2 M3 b7 l, T+ x, o) vthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1! R3 W& b' e2 ]
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
5 t: \) D$ H6 j; W' D5 ]9 ^0 |access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
. ?; H& b% O$ j% H' _) \CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
% ^) @. a! H; Q' Kpositive for the year-do-date, including high yield.
2 H; k8 H) h% T Mortgages – There is no funding for new construction, but existing quality properties are having no trouble p! j8 f6 D) ~2 X
finding financing.0 w+ G( N: z2 @* ~* A. Q. e7 S" V/ q
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they8 ]8 _$ I3 V# w w( x% O8 j
were subsequently repriced and placed. In the fall, there will be more deals.3 u% U& S) n- U- W- y
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and' N0 `7 p' T. x4 q5 S" H: X! |
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were2 y6 y" p+ n+ v- P
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
+ t# {& z5 s7 Y! S( [) b1 nbankruptcy, they already have debt financing in place.
2 r8 Y; ]8 l4 \ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain5 D- c! _$ B" j- N
today., `3 f1 G9 _0 w) B
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in/ o- D) g/ v4 A: m3 n6 j2 m; V- Y6 o
emerging markets have no problem with funding. |
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