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发表于 2011-9-17 13:16
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Current situation
" q) ^. a( ?$ i: @6 `2 G0 _ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
6 \0 P' i% M) x! y! Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may9 |& i, W' G0 Z/ K$ c J6 W
impose liquidation values.
, S- Q6 n- ~) ^5 e; [ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In6 i* C0 U8 X. i9 T
August, we said a credit shutdown was unlikely – we continue to hold that view.
! c! g2 M0 {& B/ H+ o The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension+ K$ ]; c! s2 }
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
4 }) y3 H* o1 V: J2 T! T Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 Y! e5 {1 b; j: f) |3 V! YSeptember. Non-financial investment grade is the new safe haven.7 q/ d) q: O" {* R8 V7 Q" f& s4 X5 x
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
' D8 T' }, U6 l4 z4 ?* s! M4 ]then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $11 y& g- G, G8 t( p/ p0 s. g
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have* L8 k7 X" Z3 _! l" V3 M8 h
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade0 n0 k7 {+ C8 k+ x4 O
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 Z8 M5 S" k: L$ F! {8 G: K
positive for the year-do-date, including high yield.
' Y" X( C$ o+ C Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 Z1 T* u) M. a( C$ Dfinding financing.( K2 r3 G( I. D- Q6 h
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% v3 ]$ |8 W" v2 \; l% |! c
were subsequently repriced and placed. In the fall, there will be more deals.1 N0 z) _; { c5 ^) T8 t6 _( D- L6 J- k# w
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
! v0 D* Y, m) e9 z0 t8 Vis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were2 s" z! `$ h& @: r
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
; B0 @6 z! c* Q/ y" lbankruptcy, they already have debt financing in place.
$ k, k1 p* D- Y) c7 G European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
2 x; o& {" S# g7 }4 @today." t8 b6 Q J' y' @9 P# T- I' ~
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in, W- r2 t' ^# G+ A; U5 J9 ]
emerging markets have no problem with funding. |
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