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发表于 2011-9-17 13:16
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Current situation
- x Y' h+ I; H% c The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long7 D& r: ~ K" ?/ M! ]
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may) n( Q1 z! G+ ?
impose liquidation values.
4 u: n+ S/ H0 V5 ^+ _. [ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
L1 E* W w) ? h& e& bAugust, we said a credit shutdown was unlikely – we continue to hold that view.
. L" B( B/ T& }* V$ W9 U D The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 y& z1 y& Q& j1 |) Rscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
6 G5 ]3 \7 h. }* v9 y Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- x3 d, F# I+ O# [- j
September. Non-financial investment grade is the new safe haven./ U2 B" `, Z* N1 p# C8 A
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%2 S+ @- h4 I5 ~1 L
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
. W/ d0 u3 B# Y% m+ nbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have, U* W" j8 t; @& z: R
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- @! V* @$ L8 [' p6 LCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" `' e7 p* P5 _3 }2 l3 ?5 u# Epositive for the year-do-date, including high yield.! ~6 G& o: h+ z2 R9 @
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
7 M2 r5 M# o6 |, m/ Wfinding financing.; N5 [3 `5 _2 ~$ N
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& I& G4 @( [6 _" J4 z$ h$ Jwere subsequently repriced and placed. In the fall, there will be more deals.4 k, E" u) u0 {
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! E* [) b/ \3 e0 w, t3 U: b! P* g7 Z
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' ?+ G4 {/ T6 _+ R
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
' W! F+ K& c9 T% z- dbankruptcy, they already have debt financing in place.
! ^% e0 M$ k( a& x: x7 }3 Z European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% {5 S, _9 l9 d& I
today.1 _& k8 I1 Q' r0 h! _1 `9 Z: p5 w: {
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
* ^& q* p$ s1 i! kemerging markets have no problem with funding. |
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