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发表于 2011-9-17 13:16
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Current situation
) Q5 p+ _9 l( i1 H% a6 { c$ b The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
4 o. A' f6 Y/ O4 D: K( |% zas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may A9 m2 ]; ^7 A; m
impose liquidation values.6 w1 [7 C, h+ ^+ w9 }5 L: s
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
, Z' @$ M1 o: R+ ?August, we said a credit shutdown was unlikely – we continue to hold that view.
% Q* {9 h" n" R) b0 P% n: f; K/ f The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension9 N% E- l! m: F X( v3 @
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.4 g& q& U: F5 z6 M4 F
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A look at credit markets
; J; Y& e6 s v# D Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in# M) ?8 h! h4 I4 R6 c* V
September. Non-financial investment grade is the new safe haven. O5 a: e, z1 u/ X! w- A
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 @3 @ T- \7 x' b, ] F6 r
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 K0 _) o! Z# K: d2 i0 ?% d" g6 W7 Vbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have, i0 e8 n0 u% `6 D
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade4 [: X( q7 s1 O$ L7 T
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are5 A4 e: K9 x* s! Q" d1 n
positive for the year-do-date, including high yield.
' G# l3 A! \) I( Z! }6 W o8 y' t' \ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble" m9 h- G B, A/ L
finding financing.* @) P7 @ W( r; ?9 B
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
# g# c$ Z/ G3 L$ _5 D: Nwere subsequently repriced and placed. In the fall, there will be more deals.
4 d! C+ L1 {/ A+ Q( K Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
) y; V7 J% |) s$ W$ Dis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were, i" d7 m# \) L4 z B8 K4 s6 {5 @
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
2 C! \ h! M. [6 L3 A: Q9 c+ vbankruptcy, they already have debt financing in place.% b c# |5 H2 s7 ~( [
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
3 r$ [. T6 D6 _1 f# M5 l1 ptoday.
4 h- Z9 R/ D+ l0 u |# J Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in; Z9 R# D0 x# o j6 c) m+ ?/ i
emerging markets have no problem with funding. |
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