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发表于 2011-9-17 13:16
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Current situation
) ^/ }# ~4 Z. F9 a The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ Z$ r5 W- n$ G" q6 C: w- z) Cas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may |: Y" [6 E+ [6 \& ~# t `
impose liquidation values.6 D" Z" Z% d0 i" `, W% j
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) w' g6 ? I5 ~) e0 kAugust, we said a credit shutdown was unlikely – we continue to hold that view.
/ r0 \0 D* C. K! d' y0 l; G' H The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension# v! F% c5 _" f, |/ @6 P8 z
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
2 g1 }/ V( m0 {0 t( |5 V7 L% C. r% l$ u) `& Z8 Z
A look at credit markets
7 n Y6 {- \: ?% j Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in& r: w3 W1 H9 G' P. c
September. Non-financial investment grade is the new safe haven.
$ w. C1 K) J0 J$ u2 q. x/ ~ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%- O7 z7 ?4 V% R; H0 B1 P n
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
5 S+ S- g E! t% Q; Obillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! m) b; D6 P- t& D) `1 ~
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
o$ z, i) u! ?7 W4 P* oCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: A8 {1 {* H' _7 F1 P
positive for the year-do-date, including high yield.: A% L6 x y3 Z% R& U
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
& U) D& V+ K7 ~* z1 b; p; y" qfinding financing.$ @. _8 R+ ], [. S
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
, z: h$ s' w6 b# X) v6 ?7 R! U6 X1 jwere subsequently repriced and placed. In the fall, there will be more deals.- j0 r2 P% M. p: S" T' g# k
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, z4 Z. d1 w' v7 Sis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
& D+ ~ y8 [) o7 @( ~. ]going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
/ i, d3 R6 V: Vbankruptcy, they already have debt financing in place.
5 }& e3 ^0 {8 w5 a' f European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
& l: E" i3 K: \1 S! ntoday.1 m3 m" S. N9 ~3 B. ~ L2 r: z
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
7 \: D( Y) S" f; C5 |+ R( lemerging markets have no problem with funding. |
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