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发表于 2011-9-17 13:16
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Current situation
$ J$ o& J2 q z& o# L5 e7 x/ n The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
- p2 C4 {4 q( R9 zas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. D/ \1 [/ X* M! ^& qimpose liquidation values.
5 ]. ~2 ?- }$ F In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
. G! `8 c, I5 Q8 G9 U( n5 w9 nAugust, we said a credit shutdown was unlikely – we continue to hold that view.
. P& Y4 X: |* y! {: ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
8 J5 W! B2 E1 B6 [ Mscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
* A6 P' f; k8 @9 g! p Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in/ t6 c2 W' j" c+ i+ a9 o( D% s/ p
September. Non-financial investment grade is the new safe haven.7 N) w9 X8 _$ E) x! J5 w: k
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%4 o) Q- e1 ^5 i( O
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
6 K0 a! F2 q4 P. d, s a) Ebillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
- O! N; w/ s* d# Baccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 E0 j1 k u, A3 X. a9 l+ J
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are% f% y9 i2 \3 J
positive for the year-do-date, including high yield.. n* m8 B; _5 U4 e, s; M( W& B
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
8 M! ?0 H/ m6 o& t: H( g' ofinding financing.
; {) C$ J7 c$ ?( I' c. H+ n3 j Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
" z! h) f p, }9 G6 v rwere subsequently repriced and placed. In the fall, there will be more deals.# a- ~* O+ N. L$ Y
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
9 w+ X* o8 _, his now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# z9 }- W0 R8 E4 W' I4 {: k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( o+ R( s3 a* |& p* O ?8 _bankruptcy, they already have debt financing in place.+ O: \; k$ M* k4 s5 y% s& D
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, b; J) w7 Y f8 P6 T
today.
1 r6 }. X8 e5 N- K5 _% r Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
b; Q- Z$ F6 N: [8 T' o! {emerging markets have no problem with funding. |
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