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发表于 2011-9-17 13:16
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Current situation; C: h8 K3 p+ n- z2 d
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long4 I8 [+ q( z _* M
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
6 | V, Q$ U' F1 z) B) o" aimpose liquidation values.) y1 S( j7 j( \ t$ q1 O% S
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
6 Y9 O& c* n' kAugust, we said a credit shutdown was unlikely – we continue to hold that view.7 {% g* H/ ]+ b) R2 i M: ~1 r: S
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
" V7 T7 _! M- j- `( ?, Wscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.' u) _( B& K! V3 \5 m" c
4 s3 f1 I; j5 S& uA look at credit markets
0 J- W6 M9 X2 x8 }4 p9 i Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, P2 c7 }0 g4 q& w. o$ c! f$ f' ySeptember. Non-financial investment grade is the new safe haven.8 K1 K6 _: s+ N7 M
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%: T, o. ~2 q8 q$ n2 X) W
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: I1 y o H) I6 ?
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have4 L+ B5 b; w9 l
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
( w' c# {3 \& c) o& ]CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
3 l3 I6 U- [, f5 n3 V+ q {+ cpositive for the year-do-date, including high yield.
1 S5 {$ H- y3 }+ D6 b1 q7 } Mortgages – There is no funding for new construction, but existing quality properties are having no trouble. M& b1 i+ I) ~ `
finding financing.( ~! G# d5 l/ b# h* X2 S
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& \' c+ B Y# _" m7 s, ^# nwere subsequently repriced and placed. In the fall, there will be more deals.5 Z/ K' e# e0 O
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and, M0 Q5 U* V9 s. _
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were+ |& k b* F: K* @, O
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for* c5 ?- R: a' N* X
bankruptcy, they already have debt financing in place.
1 W( d; K% `2 G1 G+ P' E9 h European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, w3 ^+ f# x1 [3 V+ ?* x
today.5 w8 e/ \0 e5 _, ^# o, k1 D1 ]
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
: O o4 \! |& V, `emerging markets have no problem with funding. |
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