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发表于 2011-9-17 13:16
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Current situation
; }9 L, u8 o) Z. e: i( j0 r' W The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long/ a, o9 K) N# K7 j" y
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may; Y3 j* C7 ~- Z$ E
impose liquidation values.
; E3 r+ ^( {3 V% p In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In+ k# _; _% \6 @) T' i
August, we said a credit shutdown was unlikely – we continue to hold that view.9 q5 K8 ~' H1 } Q1 z
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
?! v! G* v( T% d7 R8 Mscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.+ }" T* B& f) f1 m, T# @- m
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A look at credit markets
. G" E. c7 _0 P) ^5 @ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, z7 a; j O, F# \* ^, r+ j9 M1 p7 N: pSeptember. Non-financial investment grade is the new safe haven.
4 l1 B# p1 r/ d: G High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
R( _. N1 }7 Xthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ G1 o/ Q) m" obillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' k* I! a7 q$ R1 i' M( _access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) n5 L- o4 ]3 ~5 ?
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are5 a1 S& b v) a+ C* C
positive for the year-do-date, including high yield.
. Y3 ?2 ]8 Z, W Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
5 ]; J, ]7 `3 ?2 Bfinding financing.' `$ h5 [8 E+ i
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they3 Y" c W, J! q1 t. c5 Z" a
were subsequently repriced and placed. In the fall, there will be more deals.! j9 f6 J/ h( y# h1 U O
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
+ O5 c0 U/ K1 c# R( `# ois now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( v- W& H4 m: k, R
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for* q/ M* ^5 r% J
bankruptcy, they already have debt financing in place.
8 e% V8 W |5 j. t- C9 ~) | European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, C& { z! p. K. i+ V
today.9 k& k/ o Y' s' ~6 A; x5 x7 S
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& N8 M2 o' t0 A6 ^" |& B- Memerging markets have no problem with funding. |
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