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发表于 2011-9-17 13:16
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Current situation
, X$ s5 Q9 N" `9 @0 G4 C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 V1 Q9 F% h; m- V
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, ^6 X/ q# x, B0 bimpose liquidation values.
( l! U9 S9 r D e$ J0 V' u In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In: P5 Y o5 ^# H n, \7 e- U
August, we said a credit shutdown was unlikely – we continue to hold that view.$ b7 A+ H" d" N9 [- m4 Y
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
, g, j l) S$ }- m/ j# escrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.) A! Q& u9 h0 m
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A look at credit markets7 P- |# w; C: R/ y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in$ M8 h" |3 p1 E9 F! W4 M
September. Non-financial investment grade is the new safe haven.
( m6 Y5 w( Z1 [& s1 p High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
& t! _' ~7 z: F9 R1 Cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
. n' \; F k- l9 T# |: Ibillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have7 j+ z7 a5 Q$ B- R9 O( W
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade A. [ f% D0 O4 }8 h
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
( w7 j7 @7 s, Zpositive for the year-do-date, including high yield.
" G$ ^( A" Q! f2 O Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
9 t8 V% f9 I7 t0 K/ v* N; Ufinding financing.2 U8 G5 D! x1 a. l, n$ f
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
4 v. T+ h( Y* dwere subsequently repriced and placed. In the fall, there will be more deals.' N5 j) z+ S; j+ }0 _0 q) k
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and% P$ @. X8 h1 m, d5 s# v9 M1 s4 K* L/ P
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were3 Y2 R; Y R b5 n, S" I
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 w* z) K$ Y+ S$ t1 R4 v; S5 H5 L$ P
bankruptcy, they already have debt financing in place.
S& ^( @' t! @/ g, _; @3 E European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
; F$ N7 s" J/ Y$ H3 \* Mtoday.9 y9 y3 X- \) e2 R
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" q2 m3 L. s* R
emerging markets have no problem with funding. |
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