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发表于 2011-9-17 13:16
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Current situation
; A% V% T, @; {+ Y. d Q& }- h+ ^ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
. ~: ?1 z3 w4 D& b7 _* p, has funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 _" ]' V! o+ }4 t3 s
impose liquidation values.6 R9 [" ?0 d, B* p0 o& x
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 u, q' J. ?8 @* N' A5 A7 T
August, we said a credit shutdown was unlikely – we continue to hold that view.
4 l1 W$ m4 W% ]' I The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 y. U: |" z" \2 q5 k
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets." Y* O/ H; q: ^4 y3 S
" y O1 s3 U* L8 Q- ?A look at credit markets
. g& S% Y+ O# g* X. @. @/ w# c( N/ j) A Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
) z- ~5 ?! N" ]1 z- g& NSeptember. Non-financial investment grade is the new safe haven.
; j5 A3 x5 R# B9 Z7 k High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
Y4 Z: f- ^, r2 ~3 {then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
* ~% e+ O: F. E* j+ `$ Kbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( n5 o/ w8 B( ]
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade+ v3 s& {6 F7 B a" J4 o9 \9 h. R+ a
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
! d; t. f8 X0 j% bpositive for the year-do-date, including high yield.
$ E% F4 L; E0 }) P+ S Mortgages – There is no funding for new construction, but existing quality properties are having no trouble+ Q0 j: C* z& k& G
finding financing.2 ~8 x: x8 @+ Y/ E- Q/ v" k" s
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 A1 c! g$ I4 u0 I
were subsequently repriced and placed. In the fall, there will be more deals.- x$ g% f, W: l
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
- }: h+ l& D% q0 h, l4 Dis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were/ K) n+ D; I" x O( n
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
& T4 W- e. Z6 \% e obankruptcy, they already have debt financing in place.( p6 V+ C( i a- M
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain+ V; Y* L- ]& L9 Q" N; ]$ k
today. b, w1 S, n9 I
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in% v N5 t9 S- C) r
emerging markets have no problem with funding. |
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