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发表于 2011-9-17 13:16
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Current situation
! A7 k l# S' y% w+ C. f9 m p The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
% {1 j8 {9 I: C& l, n" ?as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! y. a$ ]4 I0 b& Uimpose liquidation values.
( j7 z5 K/ [0 D/ R0 f In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In8 \" q3 a9 f3 z' H3 A5 S$ {
August, we said a credit shutdown was unlikely – we continue to hold that view.
, x4 k, ?3 F+ X; j% Q The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
+ E! n3 _% X. R5 v1 mscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
1 X+ [9 a9 s) u! j" s
- \2 k: \$ I* [$ h5 [/ kA look at credit markets
" M% U) a1 W" l Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% n$ K# F4 [% R4 f
September. Non-financial investment grade is the new safe haven.# H! N) ]6 V/ S8 r
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 R2 O; k% K9 J: Y, H
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
" G, t& c. c& U$ Y- e% _billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 v1 [( Y! M' s+ |' J, \8 u8 p3 Xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
4 ], X+ D3 r; N* v7 x4 FCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 a5 g# I R- F' L3 C% a
positive for the year-do-date, including high yield.9 I3 r0 Y4 V0 X0 ]$ i" T E
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble. u( L# \; D" ~
finding financing.% _$ v: I: ~8 E# T ?
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
, x, }7 x) M# gwere subsequently repriced and placed. In the fall, there will be more deals.8 r9 r: H& p. T4 J- F( h
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
% r" ~7 m% \7 E5 Z% y' G8 cis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were1 p/ K" E9 g3 b) f% ?
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 `5 t5 m; c4 P, q8 u/ h
bankruptcy, they already have debt financing in place.
; c7 h) G) C) ^; Y: v European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain! B1 C- V6 U2 z" X
today.) O+ T, ], V" K; G) g
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in1 ` v9 t6 F# q' U/ H
emerging markets have no problem with funding. |
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