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发表于 2011-9-17 13:16
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Current situation
+ S% o; y# v4 G+ ]- y The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 \. N( S- H( u9 _' e4 C# J5 gas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 r/ K. s- i# N5 Ximpose liquidation values.
& v& S# d: ?% Y# d7 l# X, Y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
' e$ o' g$ w+ O( A4 ] S8 z1 D: XAugust, we said a credit shutdown was unlikely – we continue to hold that view.
: H ^' ]. [3 c v The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
# z+ h: O/ C# M' n& x6 j5 Jscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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# H' V. \" U; R4 E7 b1 ~A look at credit markets' b5 u! J! E9 i4 f
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
( p7 E7 ^1 R: e+ N7 ^3 v$ `4 WSeptember. Non-financial investment grade is the new safe haven.8 m% F- I1 {% Z h8 g, `+ D
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
/ _& B1 R+ {0 [; J* O9 ]then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
: @: X5 d& L5 M# J9 Y4 l# G$ @$ ubillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have) S& r0 ^, f3 h/ J
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade5 h' H X+ J ~- @- z5 `9 \
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 s2 n4 `& U7 }; ^
positive for the year-do-date, including high yield.# n: Y" J2 S# A, Y& q# B$ c
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble3 Y/ O2 W% t2 a2 G- c3 q
finding financing.
4 \8 `8 k" M5 H2 o6 R Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they1 w* O! a. }! q
were subsequently repriced and placed. In the fall, there will be more deals.2 A: ^$ r0 B' O) Q2 `+ k# f
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
( r( i7 \. }. ?is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
4 C- P; _! |/ d+ U0 egoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for4 J0 }' |1 z" M
bankruptcy, they already have debt financing in place.: [ d8 f+ x/ X( o0 d6 ?
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain# }0 W# D: H: Q) u) n/ |4 E
today.( X( }; o: F5 }, D2 |( l$ s
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 M( u4 C. b+ } ?! Eemerging markets have no problem with funding. |
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