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发表于 2011-9-17 13:16
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Current situation
' F- K' q! Y; U0 p8 b S$ @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
7 Y( p1 R0 P7 `; e9 W$ g& mas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& m7 @ `* z' r: a
impose liquidation values.5 v$ i* B# ~& N' i8 S
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In0 h5 d2 B8 o" ]9 {
August, we said a credit shutdown was unlikely – we continue to hold that view.
, X7 C! f: C! R& A The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
* H/ N0 [/ G+ F4 w+ k( ?6 Hscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( B* l- L2 D- [. F9 ~
6 D& Q" p' ]) ]& p& m- t
A look at credit markets
) ^. _$ P) Y# V! V. _ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 {2 s6 _5 G% F* u, pSeptember. Non-financial investment grade is the new safe haven.) O* @ B/ o3 K
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%3 l1 G4 e9 ^* i' b2 ^7 P5 v+ Q0 W
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
% P# C+ d+ v! m3 [" Q6 k: A' C$ cbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 ]# J+ }1 A& a/ W2 m+ ?6 D& s. ]. q5 ~
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade& ]7 N% y; B: Q% I
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are( ]) Q7 o$ Z+ d
positive for the year-do-date, including high yield.; @( B' @( t8 j; F9 T! ^) ]! Y: @
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
- Z: {7 {$ z/ e7 lfinding financing./ p% X1 [: h8 ?; {' h
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they* c* S& u6 U9 l
were subsequently repriced and placed. In the fall, there will be more deals.
, U9 d9 U; W: v% \0 t9 ~( d Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and) {- t/ O: C' _ ^; J
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
( ~) z; [/ Y+ r2 X) Z, _going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& D# H1 b$ C$ P+ s" c7 c, X
bankruptcy, they already have debt financing in place.
- k1 H9 `) s7 i: I! A0 W) D+ ] European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
, r5 I& `! K( k0 C# }today.
F9 E1 i$ t8 g! e) z1 [7 x& b+ J Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
8 |, d% C \* ?& K6 O7 z$ Zemerging markets have no problem with funding. |
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