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发表于 2011-9-17 13:16
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Current situation
0 c8 v* I) m% w5 S+ s: ? The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: i- x9 f: o1 U" V
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may1 V/ o4 c. V' N6 a; V% s
impose liquidation values.# ~6 ` G' D$ e" \) F' U8 I$ E
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In0 t9 T$ A: [- U$ G- D
August, we said a credit shutdown was unlikely – we continue to hold that view.$ g$ c! k$ {" u* Z
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. q' u6 f* {. Gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets& q9 a m8 ?- i+ L
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in& u! h; a: C4 |6 o) q( J
September. Non-financial investment grade is the new safe haven./ R& _+ x+ z* n! T
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
i1 d5 B3 |5 D1 `then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; U: Y) H5 e& A5 N7 K0 jbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 v# F2 v; q1 \ j' q' v
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) O7 Y/ A2 P; V& `1 R/ G9 f% O
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are- z: A7 P4 d6 f" G. N6 y
positive for the year-do-date, including high yield.
# q* A; X( t% _ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
* }5 w% s7 R, H, V, k+ L2 q: U; ffinding financing.
$ {/ h( \ n5 `' m& |. [4 M Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they e3 @% J7 c8 u
were subsequently repriced and placed. In the fall, there will be more deals.0 b+ R5 L4 }- K7 ^2 I$ i
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* `* z- I% Q0 h1 {: Q; W4 ais now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 u' ]7 s: B6 f" mgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& t+ x4 h- O2 {7 U2 h# R9 f
bankruptcy, they already have debt financing in place.
# x0 N& V6 g" b" x6 z; f European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, y6 h" J- p, b! h. W8 O6 R! ^
today.
8 N2 J+ x" ?+ Y, G Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in& O) u: f6 u8 v! Y' o
emerging markets have no problem with funding. |
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