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发表于 2011-9-17 13:16
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Current situation
5 W+ k% P4 p1 a4 d. M5 D; d The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
+ h1 F9 a0 a, v* V8 Gas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may# V V9 I( N& d! m7 f) G, H' x
impose liquidation values.: _, ^! x" A# ]
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In# C7 t2 L5 e6 i, X& u
August, we said a credit shutdown was unlikely – we continue to hold that view.- y* v( L; Z% G& }' A
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 `- @& a8 {4 R- m; Y8 C: Y5 d# G+ Oscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
# ^+ V3 M) r' _: _
0 |* A: Y2 x) k- i5 LA look at credit markets
# d- k, g( o s8 M- S, V Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in' h- u4 I2 I2 X7 H
September. Non-financial investment grade is the new safe haven.7 i& ?' e/ i) s- z, @5 `2 z
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
* n/ s, B, P3 u" ]! s' w7 Athen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1; Y) n' O) a+ O
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' u# z0 Z4 S' O! y( E* F+ H( waccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ h) ^) q( ]' m: }* S N
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are3 \, k2 [% G7 n) h6 q+ m
positive for the year-do-date, including high yield.- t( r J. @0 e l( X, ? d
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble1 ~7 m& z0 h. v7 I' h0 A, N& A
finding financing.
( T1 L, s. Z7 O" U* V, J" {' _6 ` Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 {1 B3 j9 x( O T9 V) g
were subsequently repriced and placed. In the fall, there will be more deals.& I6 H( p: S) I- q, k* ]
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! A/ X% ~, v9 x% ~* E! H
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
# }9 ?3 a* y# V& Igoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 u$ B" p$ J1 t w
bankruptcy, they already have debt financing in place.+ P L! o }9 ?5 X# q0 |
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
. L: `0 m7 J3 T7 c4 L. ytoday.
' P# h7 [# M/ d Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
+ X! @/ J( G$ F! ~emerging markets have no problem with funding. |
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