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发表于 2011-9-17 13:16
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Current situation4 G) C; P( J: v- F3 ]4 W
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
$ f' [$ W* Z: s1 M3 j& M/ fas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
2 T; `; c: q( L7 v3 [impose liquidation values.: j* X. N% }( n
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In+ k$ {% t' v1 a {% r% j' j
August, we said a credit shutdown was unlikely – we continue to hold that view.
7 Y8 J: ^0 U% O The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension" O' u' G( j, \4 m
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets5 ^# i- W# _+ {4 U2 Y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 i7 T) K: l7 e# z0 J
September. Non-financial investment grade is the new safe haven.
% J3 A. ^1 ^( \ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 r& l) X4 n7 W$ X: Y3 `5 x8 y( q. V
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
1 \9 ]+ S' A5 K) {billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
- c4 e* ^# M- L% j6 Baccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! s+ _0 c( n/ d
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
& W( ]; a/ ?# f9 j# }+ Ipositive for the year-do-date, including high yield.2 ~6 t+ |3 T% X# f& T; a' O
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# N: i- J" e; a; i
finding financing.3 i8 `% U: R- X0 f
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
, I8 _& U6 Q4 T& Iwere subsequently repriced and placed. In the fall, there will be more deals.
/ t8 g- M; j1 {- K8 g Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
7 @/ b) a* L+ c- Q+ {is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
9 K$ n# A" ?' M* ~( e- j6 S2 E. Ygoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
) s0 i, F, [& k0 X2 ]) W; l- M2 bbankruptcy, they already have debt financing in place.! x' ~) b4 r+ ?! d& K
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, z* e( V, I6 D' f0 {* a
today./ r$ }8 B: G) V% w; \/ i2 j5 X' Y
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- p) u5 y' c7 p) t5 I: e
emerging markets have no problem with funding. |
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