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发表于 2011-9-17 13:16
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Current situation. Y+ L5 d& y% F. Y" G7 M8 u( n
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long% J' y6 L8 C V: S
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
* ^) A( S) U* Q c1 mimpose liquidation values.' A& T. H' u8 b& m( ^/ F+ M2 d7 ^
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* l" o$ `9 e6 R; U" J3 P$ I! lAugust, we said a credit shutdown was unlikely – we continue to hold that view.
; \7 L J! j! S# Q5 M! b The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' c% ^3 g# M7 A/ J6 y# a
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets. q8 s% B7 |3 y2 U+ V
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A look at credit markets
# Z/ t2 D! G/ G8 c* a9 V/ Q Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in$ _- o- ^9 {" ^7 V: R+ b# \
September. Non-financial investment grade is the new safe haven.% i& T0 x1 s( T+ p: J
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%3 B9 L! ~: f, s; a3 Z- Q6 B+ ^2 P
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $15 X4 {& [( ^, `3 _ M; s# Y4 W8 `* _+ q3 h
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
1 n9 O0 l: w! X* d+ r8 zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 `' ^4 W; H8 B
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are0 ^4 K6 I+ q0 B2 S! _
positive for the year-do-date, including high yield.
+ C0 n8 T4 I% j% f& l9 k% A Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 ]5 H: i& u* V# ]. W$ ?+ b$ d xfinding financing. ^' v: o( v3 {5 L( l* u
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
; ?1 z. x5 t6 y- _, Mwere subsequently repriced and placed. In the fall, there will be more deals.
* k5 m' {0 @5 ~% \ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
9 Z0 w" G! n, L$ W9 [. @) Fis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
3 G% w! h* e( l$ [, U+ Y- Kgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
2 V! Z+ n0 z5 \( s kbankruptcy, they already have debt financing in place.
- `% `; Y+ |2 A5 {# B4 T European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
- \" D4 y0 s+ n9 T. Gtoday.
5 D$ a [) X+ J: J7 j$ d& G Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 V+ d0 m R9 U) Demerging markets have no problem with funding. |
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