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发表于 2011-9-17 13:16
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Current situation
5 f( [3 ]7 n, y$ U+ k% d B* O' E The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
" L2 j9 S- T, |! Bas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
/ j9 z; w2 ?7 `6 fimpose liquidation values.
& }( [! c$ W7 m In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
; X+ W* u% V* C3 h) AAugust, we said a credit shutdown was unlikely – we continue to hold that view.7 V% G3 B3 o5 g4 A5 s9 v
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension/ d- S, b) c8 S' H, m# m$ v) C: n
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
. A7 J5 d" U8 G: {% y1 a' |& g1 i/ x5 S8 R9 b% z
A look at credit markets
5 O# E4 T! t# {( v. R/ ^ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
7 ?5 N, w+ E) g+ {September. Non-financial investment grade is the new safe haven.
1 v3 z7 L, ]9 X! d2 k5 U3 v High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
7 ?% [* A: p5 |$ b7 d- C. \1 b# ~then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1& t5 |; B' Z' M7 O) ]& r6 F H
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
- k! o8 e+ j/ s% caccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
) F& }$ f7 S1 N D3 hCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
: Z4 `" _2 a! J9 f- H! p; Xpositive for the year-do-date, including high yield.
( c, h# G) V% L, M: l" ]9 N. U; [ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
4 x1 A. a. K4 _+ Vfinding financing.
+ ]9 x- D3 }! l. t6 m Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ u( _6 }! u! Q3 ]" lwere subsequently repriced and placed. In the fall, there will be more deals.2 e, H! O& P0 e0 A) Y. `+ q- n
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
0 y8 ^+ S" l! e6 \$ Yis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
; O2 j2 ^8 E% t/ pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
/ P, M) a: K0 F1 Nbankruptcy, they already have debt financing in place.9 W, B5 Q! K$ U2 W2 N
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain' O1 a3 x- w& l! X4 r' W& g% W
today.# t+ w* I4 q. m
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in6 h, U* D2 Q+ |
emerging markets have no problem with funding. |
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