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发表于 2011-9-17 13:16
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Current situation
3 Y' s5 D6 z% g7 q1 \, Z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
9 e/ _% Z* [+ A, Yas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may9 Z& k2 z2 U' l* N
impose liquidation values.
6 u" x0 y+ v0 x0 f8 Q: @ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
" y1 H" b5 v2 QAugust, we said a credit shutdown was unlikely – we continue to hold that view.- E3 e. u$ T& B& p% _
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension4 ^' z& p* `4 a+ P0 A. C4 C
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.4 u8 p; S- V) A+ G+ p" C
, A1 @4 A; g+ Y6 w# h; {+ f' BA look at credit markets
) A0 n) |1 c& f) q' g- j, \6 C Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, M3 N8 t ^7 R j- pSeptember. Non-financial investment grade is the new safe haven.& D: G. l8 u( H" E/ v: ~
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 J0 ^8 `( D( j
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1# w7 E, {! a8 E0 b' O& v& v( P
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
# t+ f; V+ @9 w1 b8 M; gaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade- ]" v3 L6 _3 t7 K9 ^( b t
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
. W! p1 X! h7 N g" {positive for the year-do-date, including high yield.' }7 w( N* L2 ?( T. H
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' ]* p3 x7 s0 G4 b. E0 sfinding financing.
, k" t7 h1 N+ h! B B) U) k/ W Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they) h m+ g9 s# C' Y2 {6 ^
were subsequently repriced and placed. In the fall, there will be more deals.! M9 a# u* J% Q4 o, ]9 k# F
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and: L1 U8 n" `- S. Z+ ]
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were; M& S6 V; l/ A) ]: Z$ L
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& u6 E# S- }) a# E" i& F( z
bankruptcy, they already have debt financing in place.
0 y& I7 U: y; s0 i' r European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain1 m7 B; E5 g* ] j7 j
today." h* g R. W4 p1 y" \* w
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in; V( d2 N: J3 b
emerging markets have no problem with funding. |
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