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发表于 2011-9-17 13:16
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Current situation
& _9 w% X) z' D9 j+ f4 D The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! X& A" _$ q* s( ^8 z
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may0 A0 l$ E# x' Y+ X2 z; U+ Z U
impose liquidation values./ a+ @/ Y2 w; I( o0 L F; s
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In5 f( T! `8 O$ ~; z7 B* ?
August, we said a credit shutdown was unlikely – we continue to hold that view.2 l# \4 \' q1 L. U8 F' g( G& Z
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
- H H; f: D" {, z2 x6 @1 cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.' A0 E* O( L" }& V4 C6 \. f9 I
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A look at credit markets
3 j" L* s; `1 S4 J3 t Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
; L' g7 y& h/ O3 T7 y4 FSeptember. Non-financial investment grade is the new safe haven.' y4 I5 |. c0 h) t
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%4 J9 F* v" A: ^3 M
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $12 ?4 y9 i+ f9 N% B2 {$ C
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have& E1 k8 K% \+ y% _; E* M
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade" Q4 { B3 i; [% U
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 F( @( z3 Y' \ `0 kpositive for the year-do-date, including high yield.0 ]6 _! y# I5 E1 A, _
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble4 _ C/ c/ y3 x3 l3 p2 U q
finding financing.0 u5 a6 P% I6 o3 W4 i
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 p! _8 U# x/ o& p5 H2 z
were subsequently repriced and placed. In the fall, there will be more deals.. L9 D5 q+ U4 T0 X$ N
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 @7 ]" ?4 A! t% K7 l0 T
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were0 T* P# r" s; P% m; w; m: |+ g
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
1 E U6 ?0 k8 {8 J% r0 ~% C xbankruptcy, they already have debt financing in place.- j$ N/ D, A! `6 ]
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
; c4 H3 N8 @& {* i* N! \today.
. H) o+ Z+ ? L. | k- @ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 G2 b& V, |0 Q3 T# D8 e& s- Kemerging markets have no problem with funding. |
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