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发表于 2011-9-17 13:16
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Current situation
9 X( y; `: V3 l The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& {# q9 X" g, @' x( Y& \3 tas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
7 Q: j# f( X+ m6 n E9 jimpose liquidation values.: R/ s4 J- {- G$ N5 X* \
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In3 v2 t l* [& j5 B6 w$ @( _% S
August, we said a credit shutdown was unlikely – we continue to hold that view.
& k) y5 q4 E4 X" w" j; A2 r The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension! k2 i. j4 K8 @6 }, F4 H
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( z$ `$ e" O. |
* I+ b* j5 s% c4 zA look at credit markets
! O n- @" V1 Y9 U) _ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 e+ Q2 U( A. a2 Y
September. Non-financial investment grade is the new safe haven.* V( d" X" `7 b! R, F N" }% u
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 `1 k0 t3 d. E- }) C2 u
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
& Q! X$ n! V o, ~ obillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have% B' s4 J2 \8 A$ m i2 K: k7 {- S
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade; [8 W+ M0 C" Y! M! G5 w& k
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
( k+ X5 p' r; V, r- opositive for the year-do-date, including high yield.
# K/ D/ Q( c" Z% M0 L2 S Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
; ^6 b% ~% b$ Mfinding financing.9 R5 `# o! o/ d: E, Y0 Z6 H
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
w: o% M: {' zwere subsequently repriced and placed. In the fall, there will be more deals.
; ~9 t: _6 }+ O2 @4 R Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and) R6 P' @; P1 x* ]
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were0 h) z% M* e' [1 U
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for( w9 A8 i& A; o% R
bankruptcy, they already have debt financing in place.
# P$ ]% T' `8 t9 D9 O" J: s) m" d! j European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ b8 j$ k8 ^- l( X J7 B9 W
today.
+ b7 ^2 O' H* ^0 h& P Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in7 x! S4 l( Y; Q) a7 @
emerging markets have no problem with funding. |
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