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发表于 2011-9-17 13:16
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Current situation
/ b# D& d; }5 Z/ f% E& i. u2 Q% r The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
: O. b! d; q3 f6 g3 Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may- u. O, o# P4 K4 i- A) T
impose liquidation values.1 q$ V0 k; c9 f& _* T9 J
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In( s5 G1 D7 Z& @( C) |
August, we said a credit shutdown was unlikely – we continue to hold that view.) A& g. N* x' S
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension4 d# n: ?& D2 [* ?
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.. X. T$ e) w5 B
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A look at credit markets
" S: P! \8 C" w. w. `) Q2 H1 x Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% h9 g1 [& h; {1 q
September. Non-financial investment grade is the new safe haven.
0 B e [0 |# [& P( p+ }( R High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%% J' a' R- e7 f% N0 M {
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
1 s' F1 r- }, [3 Z# T) h% Pbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 ]' T9 w) t W; naccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade5 b- ?( a; `1 o" K
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are; w) j7 N0 d+ h* l1 @1 j# |! ^
positive for the year-do-date, including high yield.
: p7 L: b0 ?, H Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
4 R' D# ]$ B5 Y% @" cfinding financing.
0 m: _6 A/ _6 Q3 x- t8 P$ f Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
" Z% r. Q5 V; owere subsequently repriced and placed. In the fall, there will be more deals.
7 @9 i1 y5 u; l& I+ C" ?, ] Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* [' h/ K0 l, R2 R8 [# }% m! e- [
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 ]' \8 I0 r2 g- r# z/ Y7 B/ ~going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
5 h3 Z9 t7 ~; J% ?# ~+ gbankruptcy, they already have debt financing in place.. _: }# {& f& x X" s8 K: r$ ~6 ]
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
% b! k% i/ N, l4 _ c# \6 Ctoday.9 j1 D, ^9 U& c2 u# S* R; o' q
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
! {; y. X6 m0 o4 Kemerging markets have no problem with funding. |
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