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发表于 2011-9-17 13:16
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Current situation
, ]& V$ e, Z2 }9 p The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
4 h' X( y% C# \; w, l/ h6 E# qas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may, P. ^* m9 n/ h% X+ h
impose liquidation values.7 R. y7 k* D5 l& e6 Q; R! I
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 H: K1 G$ {0 e/ D: P& z: JAugust, we said a credit shutdown was unlikely – we continue to hold that view.
& z; a' Z3 V: U, o The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension, }8 W1 J6 G4 \. U( S
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! Q- p c1 I6 t: q
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A look at credit markets( A6 ~$ Y( b+ S9 |# C& M
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 o6 R, F7 e- R$ b
September. Non-financial investment grade is the new safe haven.& x7 w( o+ U1 F8 B0 G& Q
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%; L% i! B# W6 H& z$ u* e' x
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
, w$ V7 A" G: x4 {billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have: K, N) \2 k! X5 F
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade/ F6 x. w1 \ v$ o4 b8 i( v
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
+ C- D, _+ P1 M5 C- Q* x; {/ zpositive for the year-do-date, including high yield. |+ \' j. o1 x/ I
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
# |" X1 m2 x3 A$ T1 xfinding financing.
- S! P0 T5 d! n5 |6 V5 x+ p Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
4 f$ I3 e; m# ~were subsequently repriced and placed. In the fall, there will be more deals.
3 I- Z( M" B$ ^) ?" ^ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
1 B9 j. Q1 f& V% I5 x$ Iis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
2 j3 G/ p( q' u# Jgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
; @8 P2 A( P6 r! r, gbankruptcy, they already have debt financing in place.
K5 r+ B' M# ]0 B1 Z European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain- v' J/ `( h/ x$ P1 L: F. r% E& s. M
today.
5 a$ o+ e- ?$ g& v Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ d# ~7 B. J6 m2 x
emerging markets have no problem with funding. |
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