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发表于 2011-9-17 13:16
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Current situation
7 `" \( y4 z' w- R The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! n. B" `' y# ?: ]5 Z! d
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may: q3 ]) V( O4 E6 r) @, {# T
impose liquidation values.9 T& @& Q; w7 W2 |
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
7 d7 ~" C! W4 N' C" J% rAugust, we said a credit shutdown was unlikely – we continue to hold that view.) f/ n4 b: w5 g! l
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension) h1 D3 S" z G9 C# R# B
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.0 q) A6 s* C) H6 |: ? E
" ]" w/ A1 o F' \3 nA look at credit markets! X: g' Z3 `% f+ M
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
; I; W- A* O0 X: A4 GSeptember. Non-financial investment grade is the new safe haven.
6 `* \8 T; Q+ v High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
* [2 P, K5 ^/ Ithen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 B1 D. S9 X8 G' K! u
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! T, y& Q/ o3 {9 a; ]
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
: ?4 T% }% V8 `& K/ n0 ~' mCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 ~+ I6 J' g) }positive for the year-do-date, including high yield.
9 T; j/ @1 H, V( r: N8 N' t) { Mortgages – There is no funding for new construction, but existing quality properties are having no trouble% _6 i, D& X& J/ m. R
finding financing.
' z+ n4 x- I! [! H Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they; }: r f+ l& E7 x
were subsequently repriced and placed. In the fall, there will be more deals.# d4 A- \) e! ~: ?" b
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& G2 Z) F. [' D0 T2 ~is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
7 i& `. X5 v# D7 H& b+ o5 s* qgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for4 s9 b/ m1 p( @6 T ]; w6 v1 ]4 l
bankruptcy, they already have debt financing in place.
+ a4 P, ~! j; X European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain8 m- X$ y" V+ R$ x; ]' a, p1 z' F
today.
* J6 S8 w3 Z% i' i Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
- J \% S( L! z' F0 Y) y& temerging markets have no problem with funding. |
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