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发表于 2011-9-17 13:16
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Current situation% B. n9 y' H0 S) F% ~: ]8 ^
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& P, i* F/ e9 Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
2 _1 G- b. t5 D4 [impose liquidation values.
' C' `/ c6 ?$ h; @' i+ B In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In) N5 m( x1 c0 l- s
August, we said a credit shutdown was unlikely – we continue to hold that view.; h' d8 {1 @) M) A U
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
& q/ A( l d& F5 j. Qscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets., C6 |) U5 p0 @" T- @ Y+ ^' \
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A look at credit markets- ~ j6 c0 G, d
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in" v& h8 `$ c1 R6 b
September. Non-financial investment grade is the new safe haven.
0 O8 ]. E; g) s& b+ o High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%8 S/ r; V% a/ s+ O1 A b
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 b8 c4 h7 S" rbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have1 m3 d6 k7 W; N2 U5 ?" S C
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
3 P6 a5 B) t% B* wCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: o1 k/ N, `3 c# _4 p U! d
positive for the year-do-date, including high yield.
X" P. r( X' B; {) n Mortgages – There is no funding for new construction, but existing quality properties are having no trouble" n J' Y; h' u. S6 K' j: ~; ?
finding financing.5 ~! D8 ]+ e; A& M y
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they5 B6 N$ `+ `- c0 j" z& ^
were subsequently repriced and placed. In the fall, there will be more deals.. u' P, C( E+ r2 w" d/ a
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 q0 P/ y/ \6 j! o: q# g3 Q- t$ @is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were! ^. e) [3 D+ v7 x* |) }1 I! B& D
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for/ x( q+ H( k/ ^( @/ _
bankruptcy, they already have debt financing in place.4 f O; E3 u% I' t6 P# ~
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
* X& i+ M4 I7 I, q8 Y. gtoday.* f A" u% t7 ?6 t; l- v2 ]" q3 l
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in% X0 ]. c! M" A% [ L# o) X W5 z
emerging markets have no problem with funding. |
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