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发表于 2011-9-17 13:16
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Current situation
! X9 z" V& X6 R2 C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! R* O U! ], }; S( r# N5 |0 W
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may5 C3 x; h+ n* I9 j! g, a' l
impose liquidation values.) w) ?, x4 D) Q8 `. q a& c# M
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# K: Z* j, S. C# nAugust, we said a credit shutdown was unlikely – we continue to hold that view.
1 Z3 Y* s% R5 H/ F9 z3 N The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
! J! S/ b* Z& \( }( kscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
4 w9 T; y' u' M5 L% y( B Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in, \. e& [5 j U* S; [, u& _
September. Non-financial investment grade is the new safe haven.
+ a, I$ p: r; K6 {4 y5 w High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%: F% r" [. f" y3 y7 D, ]- ?2 m9 d0 t
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ d6 @% w! p; m8 A4 l5 Gbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' T E: n8 x3 Q. Daccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade9 A: O; w" d, Z
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. x2 N0 t' Y7 O. j+ K
positive for the year-do-date, including high yield.( M5 H4 [1 E: r1 }* W$ m/ L
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble9 y4 y# w6 M9 \7 K% p! q, ?% \
finding financing.
8 K- s" X8 P* G f; d Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. N! i9 v+ }1 y2 F# rwere subsequently repriced and placed. In the fall, there will be more deals.
- \0 A3 b: k5 C( J8 b Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
( `1 Q/ F# y0 j# B& ^& qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were2 H6 b2 c4 f' ^3 c$ p+ q
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
% s) K4 d+ U% r% x% gbankruptcy, they already have debt financing in place.0 @5 [& m1 T$ t7 y# V0 f& J% ]
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
1 D o- l8 y- u0 Jtoday.
" n5 b; s; z% D1 Y( M Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: b V9 R! b* Z6 M( f
emerging markets have no problem with funding. |
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