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发表于 2011-9-17 13:16
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Current situation# ]/ G) m; Q3 r* N
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long9 v* u9 Q8 o3 g: t9 O& t
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
5 g Q) M* g/ |, b% Ximpose liquidation values.
" L. @: |8 g1 v: Q In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In6 D) t% s/ B2 A% B, {
August, we said a credit shutdown was unlikely – we continue to hold that view.
6 L7 D3 T3 n! t5 _. U' X The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension: k) }7 |, {4 C
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.& _6 h4 }. u1 a+ V. e e6 |! t. K
, j8 c6 n3 T" h: nA look at credit markets5 }8 m/ b. u% O$ n# d% L
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 a! |3 B8 I8 _; j c3 a/ b
September. Non-financial investment grade is the new safe haven.
* E" ]1 Q9 @/ H4 G- o2 _ j High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%/ M8 q; i* |; Z3 r6 u
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
" t7 J" g$ u! b E& U- `6 rbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, ?7 e* | N* [' n+ Eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) s5 s, |+ h! j3 w$ p3 h
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are, ]5 v. A7 @5 [7 G4 f3 f
positive for the year-do-date, including high yield.2 x l% Q. Q# ~/ i/ s
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: J- O; x; ~8 Bfinding financing.6 P5 k% Q2 p9 q/ V3 X
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
/ X3 r* i) M- X, Swere subsequently repriced and placed. In the fall, there will be more deals.
& y/ |, N7 S( ~7 h2 T# b# r- \ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# c+ m# d/ l5 I5 F2 T6 s
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
" a9 w4 G( v1 v y( wgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for, E+ a. m& `) @! [
bankruptcy, they already have debt financing in place.
- m, i, V# e6 p7 A% s European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain! e2 X9 y" i0 H6 T' O# O
today.
: y( U; m. V0 p l( w/ @ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
+ R% }5 F5 O( O# T( z$ H- {$ X. }emerging markets have no problem with funding. |
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