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发表于 2011-9-17 13:16
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Current situation: `4 F* t T5 D% f5 B) a
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& D% m9 ?4 L) Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
7 T; A- w5 X b0 b, Q8 `impose liquidation values.! k2 b* B7 @' G
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ C! m5 \2 v# ZAugust, we said a credit shutdown was unlikely – we continue to hold that view.
+ X7 e! `( Q: b) W+ j4 U The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
& \( u" R! y/ u/ `* c9 Kscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
: a7 K6 k, w" s; u; j" {, z8 z( I Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 f; Z3 l4 M1 H0 T$ j; ~
September. Non-financial investment grade is the new safe haven./ P0 o9 R, v5 b& |' y1 j: ?7 L( q4 O
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
8 |( `* _% H! e1 I1 t, V" [then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. l+ H8 r& w& U1 k% e; q
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have1 `7 ]/ k! X, p9 f# Y
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; k. {$ p0 d8 c8 C: R0 M$ h1 nCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
! S: H y- A3 j+ Kpositive for the year-do-date, including high yield." S1 B0 S5 _* J. @
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# x; A3 T& Y o0 `
finding financing.* {) {* i2 a" c# R6 ~' P' t
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they, B R& ~3 `# L/ P; F* U
were subsequently repriced and placed. In the fall, there will be more deals.
0 ^% |+ ^% K; u/ t" i! {" v Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 }) R( j+ ]0 z: }! L/ B
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 j! ~! d2 D8 ^( S, hgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 n+ V, D, l' ^
bankruptcy, they already have debt financing in place.
. U, o- G$ M) z" {, Q: B European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 t9 a& @1 G7 N
today.
% N! A; I. O' K% A% V Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 g% U% ~5 `4 g5 \% y4 I5 n8 M' t9 oemerging markets have no problem with funding. |
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