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发表于 2011-9-17 13:16
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Current situation
) m* X9 G, K% }8 d( | The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
8 |. H$ P" g+ k! das funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may$ U/ X2 a+ @$ W: _1 I P& o! f2 g. r4 \
impose liquidation values.
7 B# N, c9 a& i1 G$ u In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ j! Y! P, M) ^9 LAugust, we said a credit shutdown was unlikely – we continue to hold that view.
# g+ E8 k* o" W+ t2 m6 h The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
# ^3 b% ?$ r6 X0 x* s% ]scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
) O$ O5 m( x" s
- |1 c, e/ Q1 P: mA look at credit markets
7 j, {; C. M. w- p Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in( C- f3 L% g# C
September. Non-financial investment grade is the new safe haven.
/ w/ i# \9 o! S$ X High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
5 U# r1 O$ R2 Y! l+ Sthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1' C5 q: k6 I: U" z( K: u
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
2 z ?; c2 M/ T2 O, |- [access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
+ E5 @( d3 S* Y: I; vCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
x% D1 a, d0 epositive for the year-do-date, including high yield.
8 j1 F9 T y5 ]% S Mortgages – There is no funding for new construction, but existing quality properties are having no trouble' Z. m& X* v+ O8 C
finding financing.; T; ]. q1 T. S- E1 d. `& m
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
3 z' x* x4 Y4 P" T) S. fwere subsequently repriced and placed. In the fall, there will be more deals.
2 }" {$ \4 \ T _7 [ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! ?9 O$ \6 G$ p
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
T M- ~& N& O! Y- t- ]going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for$ q: w, M4 E8 B( i5 n) B
bankruptcy, they already have debt financing in place.6 M/ ^( F H# u+ E7 [ N& X& ?# H
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
1 x- _, C& q2 B6 l3 U& Gtoday.- K/ b# E" B8 b" L) @( Q
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
. K) f* I% t! W2 Nemerging markets have no problem with funding. |
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