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发表于 2011-9-17 13:16
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Current situation
4 H- z( [" o+ @# C9 v The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 q4 g( T9 {+ D) mas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
8 k/ L/ X0 G: U4 o$ M& @: w# pimpose liquidation values.0 {" G7 ~/ l: H
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* N# }1 z' c; {# K( GAugust, we said a credit shutdown was unlikely – we continue to hold that view.% q& }" X/ [7 ]2 R$ H9 I# z* @! k$ f
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
! w6 F2 H' y" x, @0 Oscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.4 [4 r; B8 `+ X
! e N7 {3 H6 Q6 }A look at credit markets
* L' ~, H( l: t6 j& B2 z* A: U Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- y7 L3 v2 }) v# U- m$ ISeptember. Non-financial investment grade is the new safe haven.
& ]# }1 l$ @9 i7 f- G8 D High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
. \2 e4 ?2 v# F. O1 `' l* l8 ?then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1" f0 h# z) e& Y# N6 O' s
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
% P i5 A {2 `7 i1 a; |! M% x, daccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade8 {/ F6 u* m+ \1 J9 l
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
% A }) r: m0 Z9 S; a/ X9 g$ w& Tpositive for the year-do-date, including high yield.
- s2 y# e5 @2 Z. r: s2 p; P Mortgages – There is no funding for new construction, but existing quality properties are having no trouble) g2 @; Y$ p3 d, |9 H; `! q
finding financing.# Y3 P1 S1 a& e
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
/ w" _: i( i; n0 v- X5 Zwere subsequently repriced and placed. In the fall, there will be more deals.& W8 o! }* Y9 T6 @# f9 w
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
5 v1 }' A6 _6 G/ o! Lis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
' S- p8 `+ l$ |, Y6 {+ X. sgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for \8 ~: q" m8 I" c
bankruptcy, they already have debt financing in place.- k r/ ]8 u% E5 ?+ |) m( H
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
4 d0 f n! `# T8 h6 D7 T3 Utoday.
6 h3 h5 T/ B& X) B9 W! U Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in3 f" H5 o5 v' J: X
emerging markets have no problem with funding. |
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