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发表于 2011-9-17 13:16
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Current situation- m5 @9 t! C4 O* h0 a
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
3 w/ ~5 \! s' {! P( n7 Bas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, c2 a* j- F: C) W" {7 Vimpose liquidation values.
2 h6 E) p9 H4 V# c& `. `. k: H In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In' z1 a4 r( P( Q) N& z, N4 i' U$ F% R# H
August, we said a credit shutdown was unlikely – we continue to hold that view.
0 c5 F h! Y7 j6 V0 Y The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 v' p/ C% _8 H! O( w9 e7 N
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
A2 z" `. J& S4 H/ n' A$ J& ]
@: H" a; R( n( WA look at credit markets
7 O; k5 U2 k$ X8 J" e Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in& n- y' o9 d7 z# O& c
September. Non-financial investment grade is the new safe haven.2 l* g; t3 U% W
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
. e/ a: K, Y5 ?# k: S+ Pthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
7 y" [+ ^; J# ubillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
) V x$ G9 R& ]% B4 x( v q8 }4 G" d! @access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade+ |+ Y" [1 s' _
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
' i/ d1 B, O8 p9 f' B/ Wpositive for the year-do-date, including high yield.
3 Z2 |2 o$ m- U6 D, Q Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
6 @9 v3 v- P7 b0 q" S) y% tfinding financing.
) n& c j* G5 q) P) ] Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
q0 d% w! I. D4 u' i) E$ Ewere subsequently repriced and placed. In the fall, there will be more deals.: c: @4 b: U1 G. `2 N6 y* P0 ?" {
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and$ _% |2 g9 W; s6 A
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were2 z! e3 l$ i" `; ~6 y% Q& _
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' _) s$ n$ {; ], T
bankruptcy, they already have debt financing in place.* \" R( d0 U3 ^1 o* ~5 u; F
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ T; Q) z3 m% \: E( s& P8 l
today.3 l8 u3 Q) j1 a& q
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
+ g4 o# {4 B5 Q2 O" L8 Zemerging markets have no problem with funding. |
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