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发表于 2011-9-17 13:16
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Current situation
" i* ?5 s9 W0 h7 f5 m The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long% T0 g* t* \: A
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. s: d/ r, k: R2 H* n/ Limpose liquidation values.
m* f3 f; r9 U4 U: ?+ A, x In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
! @0 C: @, ~& s% x, U L9 AAugust, we said a credit shutdown was unlikely – we continue to hold that view.
+ ?( W6 j% `: M, {* ~' | The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
( `. T, ?' _: [9 f& Ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
: d% N; W4 U1 I4 L8 _5 [0 {2 W0 ]+ w8 O3 a( e( O; V8 P! ?
A look at credit markets
+ H( D; W; g; ]3 b Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 S4 @: w+ h$ H* L! \$ A$ b8 {
September. Non-financial investment grade is the new safe haven.
. ]0 l1 ]/ `* l( m- ~; \8 w* } High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 t J5 ]! a7 F1 {5 d6 r L
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1+ m1 ~* ~, }8 w0 p: u L( q% {
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
4 x0 t& z' M% Z- ]: Taccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! k0 G' U! B9 G5 Q/ V0 P! W
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are9 X B6 \, ~1 W- M7 N" a) P& i
positive for the year-do-date, including high yield.7 H9 M) c9 N9 ]/ a5 h* z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
- P, `: z1 }! }# }4 C2 o( Ffinding financing.! B) P$ J, t- j8 X
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% |' X( F0 a" q
were subsequently repriced and placed. In the fall, there will be more deals.6 r3 i! s& G8 j
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and- ~9 [, v$ W* `5 o8 [) E
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
: ^4 Y7 u: r4 k- n& W8 e; Ugoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for+ ^. W6 L0 F! e
bankruptcy, they already have debt financing in place.' I7 O8 [. u+ K5 E
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
( l t# j7 {3 ^/ u( L+ k3 p% @today.0 x m8 k, H- `4 K/ C1 F% y
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
1 N- f3 @$ s2 S* i; P! ^emerging markets have no problem with funding. |
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