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发表于 2011-9-17 13:16
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Current situation
5 E2 \9 _. k. x The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
" j( |3 Y3 U; F7 ?5 Aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may) y9 d4 G' L" J S
impose liquidation values.# z+ x1 l K4 N4 @& x4 d
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In: z1 w0 [" r+ ^9 J, ]3 W: y
August, we said a credit shutdown was unlikely – we continue to hold that view.5 W4 ^1 r' x9 w, |2 |) E
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
; F! o& [0 a" L- v4 d% X" vscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.# Z. }5 [; B2 ]$ f# J
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A look at credit markets) R% d# X& j* l$ r+ x6 I! r
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in$ l6 R) |; Y! v5 u! I! k+ s& K
September. Non-financial investment grade is the new safe haven.* E! L6 M ]" u1 D
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
( i) | Z/ ^( Rthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $13 s! r6 n! I1 j$ w& F
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- U" ]) Z5 X2 s& |! u
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
/ \5 ]* f/ |, I3 HCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
4 X1 h! M& y: F; Y2 @positive for the year-do-date, including high yield.0 ~" x, R% G' h2 C4 z6 \9 K
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
9 [# O }2 Y3 Efinding financing.
9 q+ a+ ^' g+ `9 s3 `/ A- b Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
4 R, F! _: r6 h+ Iwere subsequently repriced and placed. In the fall, there will be more deals.! p6 Z6 x9 Y% O4 W( N8 B& u
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
6 S: p' P' q" P4 q% Cis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
' D4 b2 x7 o& C6 Lgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for! F: Z2 ~$ s0 F# v# S
bankruptcy, they already have debt financing in place.) ^; Z& }" @ ~/ k7 S P
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
, w7 a3 t! W* k- ~8 k; a Ktoday.$ x: E1 Q0 T' \$ H& B
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
; B- ?' E1 x6 V" E i temerging markets have no problem with funding. |
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