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发表于 2011-9-17 13:16
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Current situation$ T: o8 h0 z6 z; D# S
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
; m8 J5 Q+ I' l% Yas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. C0 f9 y ?1 T7 f4 C& `9 E; Pimpose liquidation values./ c, C a+ ^: V7 k/ Z. C- P
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
: l( a6 w, U% u; v2 ]2 k2 i& P4 a! JAugust, we said a credit shutdown was unlikely – we continue to hold that view.
; f: {( K" r4 U7 k+ q The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
" D+ a2 w# Q! d9 |! k6 k+ uscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
! J, e/ e+ X9 j5 S0 Y, m Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: l( N3 p2 ]" X6 {September. Non-financial investment grade is the new safe haven.
: ^# x" e, S6 w) l/ W/ V* T1 D. Z/ j High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%) Z5 I0 G# `6 b- E
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1* E# M( Z( i. u# @1 q
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
$ [$ e T R& S% }- faccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
4 S4 N3 q1 k. w% T) zCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 |& Y) A0 o7 F2 Gpositive for the year-do-date, including high yield.+ H* Q* u0 w& I* D. c( U T- \
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble7 y' o& `( T1 j7 x+ F' _
finding financing.) V; x5 n6 V2 ^4 u5 X$ K2 Z
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
7 z+ G1 ]5 G4 B: T, {( v* [9 rwere subsequently repriced and placed. In the fall, there will be more deals.
" A5 R$ P% i3 _9 n+ B, k Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and2 V9 h" [6 w; b! q4 F3 ]& N
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
' i/ h* q2 T+ P+ n! x) l. E* pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( v( F8 f: Z; b$ _% G5 ibankruptcy, they already have debt financing in place.4 U6 F! w( `6 w2 z, J) @ B
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
7 R0 G9 G8 c: K6 h+ q6 @today.
^% c/ {0 u: I) k0 R( [9 w! h3 W Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ e9 i- Q. b1 H5 P1 w" z8 ?
emerging markets have no problem with funding. |
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