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发表于 2011-9-17 13:16
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Current situation
, P& }: Q2 G7 p) W The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long7 W: q) j( G/ Z8 q, x! y! Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. e( V! U/ u( vimpose liquidation values.
I! Y* D9 V2 x; c7 ^2 X9 a In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
' {$ h* n0 x4 M( d6 v8 E* ]August, we said a credit shutdown was unlikely – we continue to hold that view.
) e0 x& e2 N% X9 |# ]. r* C; y The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 }; O# X- [( R f' h7 G7 H
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.; [- R9 x# r" W4 e z* o
$ ]! ^9 o m1 X5 rA look at credit markets
1 Y" N; V% F) F Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 }% |1 M- M) USeptember. Non-financial investment grade is the new safe haven.
% b) k2 j. J" V7 F9 Z7 K- }$ n High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
" N! ?. P2 Y4 F% Wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
4 z/ I) B& m" d+ r+ Y$ Xbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
2 X, {! u7 s: Y; C5 waccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ ~8 J0 K% {* N! A1 O
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are$ M8 v( [0 F3 r) U# k% {+ F
positive for the year-do-date, including high yield.2 y" b* | h9 ^* q+ X( g
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
2 g2 n" B# |4 kfinding financing.: Y/ R3 p+ A$ f3 h! ]9 ~) X
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
# S( G1 q2 \# n; i/ X) @# Cwere subsequently repriced and placed. In the fall, there will be more deals.
5 O; {" p: A+ O( }' W3 n Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and8 h! S' D. }, N0 h$ B+ B) y
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
7 r/ T* x' J$ e8 P* k$ q4 @8 ?going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
1 z9 F' O8 M1 e/ c( D1 kbankruptcy, they already have debt financing in place.- {& L" d8 A( J# I# V$ C; H
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
+ C6 r; P0 K; r+ J- [# u7 i# M& y+ G2 btoday.* K0 ?4 t- g/ x! E4 Y* w
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# Z8 D: z2 K7 }8 E3 F" l# J1 k* N
emerging markets have no problem with funding. |
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