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发表于 2011-9-17 13:16
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Current situation- c7 V5 w! @! }4 i, f
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- a4 N$ d8 o* A# c# V
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
7 g J" U* }4 n1 U9 Z2 X; jimpose liquidation values.& @ n8 \, x& p; ?4 m3 |
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
& P: I, p9 m2 RAugust, we said a credit shutdown was unlikely – we continue to hold that view.
# k2 M4 k2 I7 y- B) _" a The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
- a: y) D( ^4 K: }. lscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.. B4 |( p* A4 F* ~4 @
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A look at credit markets
" U& {3 ^+ ^1 j# g Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
) Y& F3 w7 n" l( a' t3 E. w KSeptember. Non-financial investment grade is the new safe haven.
/ P4 y1 u% v$ E+ k High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
9 |( x! z" {8 n4 Z" Hthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $13 G! Q: T" b$ ~% g) C4 L
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
: R( X1 {6 C- C4 Paccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
, t+ D6 A& P/ kCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are3 s% u+ M! m4 y
positive for the year-do-date, including high yield.
5 F" t- ]8 o$ |* ?$ H' t5 x Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; }4 V6 \3 x9 @3 k: g1 b# v1 g
finding financing.$ f: \3 Z8 Q/ }3 _7 T$ x
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
2 U+ q) Z) J; N3 k, s0 M, y: Ywere subsequently repriced and placed. In the fall, there will be more deals.
7 k1 a; N5 Z# M) g$ D1 S9 r2 A Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& ~- c$ z& D, o- p G& x% }7 Lis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were, A) I3 D9 F% q9 b$ I/ w
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for5 S0 B M D( c4 ]- ?* D4 D
bankruptcy, they already have debt financing in place.% A. t& ~; d* T/ { z
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
# v9 A: [0 G+ a" c! B- k4 P! htoday.' [7 I8 R/ i) Y
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in3 X! P4 V4 b5 e! T2 ]0 N
emerging markets have no problem with funding. |
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