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发表于 2011-9-17 13:16
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Current situation
$ m+ Z5 B, E& {: K6 Y7 O The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! M. Y$ t9 n. ^
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may4 {: _( L Z: }+ ]; V
impose liquidation values.1 p: H- j" Y d$ p. g
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In* h9 [8 i; S4 A* j
August, we said a credit shutdown was unlikely – we continue to hold that view.
! H: R% U/ C. s6 m& B N# } The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. Z6 n2 B: x% p/ s2 ~
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.) G' N9 F( Z- a% W9 @/ S
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A look at credit markets. h# x- e4 \& X* p# D
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in$ q! j5 O: i2 |6 r, A+ l& B
September. Non-financial investment grade is the new safe haven.
0 v8 a( `- B; W High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' b" S. ]' @; s- O/ h
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1( g7 }+ G9 x9 o" K1 x3 ]
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 I: M; E8 W* A7 s2 H
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
0 G0 k% K! D2 e X/ @CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
3 {* T" L/ f5 x" U9 Dpositive for the year-do-date, including high yield.
) E" i# j7 ?1 w2 O* M Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
! V3 d7 r$ g6 mfinding financing.6 E, H8 q* V4 [8 j3 P* w0 x8 A
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
3 _+ `/ n2 j+ O7 a5 w" @- Rwere subsequently repriced and placed. In the fall, there will be more deals.
5 W6 p: x( v. i+ P Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& I8 V7 s* E. P( ]is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 N7 f2 S4 A4 H+ y. Wgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for3 d0 F' R" U5 d) r8 J6 _
bankruptcy, they already have debt financing in place.# b$ k1 d* _ X* X
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% ~5 K, S) |1 ~
today.2 U' n, h6 n* N0 A# s8 U
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
! Z; I* \4 d% [1 r) `5 zemerging markets have no problem with funding. |
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