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发表于 2011-9-17 13:16
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Current situation
- W' \. G. w: f6 S4 J8 R, i% Z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 ]% G2 K) _2 K1 ?
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
: o# t# a8 w0 b# w$ O3 vimpose liquidation values.! Q& R5 a8 F* e2 d
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In! S; v6 e. s9 j- y9 X# c# q
August, we said a credit shutdown was unlikely – we continue to hold that view.
/ f/ w0 X4 n& i* g- u The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. }- h6 r$ v2 d; Q$ b+ |. R
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.7 Q7 e6 { ?5 Z# K
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A look at credit markets- [! L' k0 ]* C O$ L
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
% ]! |6 k' B8 \% L2 q/ RSeptember. Non-financial investment grade is the new safe haven.
# _5 L9 Z: M3 S) b- Q7 f High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
7 F% F7 W# h: h3 k; f; g: Z9 |then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 H' e; M# m. I) j3 d+ dbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have8 b+ J' z( E1 a/ p4 f) N
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade. b+ J3 {! C! U1 j9 i
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; F9 k, `0 N8 @. f' p, [ lpositive for the year-do-date, including high yield.0 v" I) i1 K# I4 \" b
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
5 z9 Z! D2 V$ s* a% y* J) t- G' H9 ]/ |finding financing.6 L6 f1 E5 V: ~( ?
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they' }$ V- [: P& M# y2 n" `
were subsequently repriced and placed. In the fall, there will be more deals.. m% `: J8 `) K- L0 _6 p& o
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and7 Q3 Z; x5 x# h' S) B) t
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 g, j# b/ y+ V4 o- Egoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 C; U8 s! v3 E7 y- Z
bankruptcy, they already have debt financing in place.2 S1 t) x/ o! }3 c; \5 ?
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain' D3 {. |6 J, l8 @
today.5 t3 m5 [" y2 P
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
" T. J# R% b8 ]' r1 s7 P8 K- wemerging markets have no problem with funding. |
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