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发表于 2011-9-17 13:16
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Current situation
! T. @4 C' Y8 ?" ?; T The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 h) |! P/ ]5 E2 { a% o B
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may4 h: P2 J9 }: f
impose liquidation values.
0 L& c2 m. k5 k6 B7 N B: ^ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ b2 z, `" {( K; f3 S9 g6 I+ J* [& aAugust, we said a credit shutdown was unlikely – we continue to hold that view.% k" Z& S; o9 i0 J$ L, B
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
! K3 _, K' q* W% c5 } s/ c; Pscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.0 X2 P. R* a3 w; w) d h+ P7 L0 M. C
2 _$ {: {1 P3 K: u( n/ [
A look at credit markets
; b* b7 f- l L7 S Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# r: Q8 t7 Q! k3 zSeptember. Non-financial investment grade is the new safe haven.
* } c8 }9 m9 T) G) H' m High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%$ U5 [; n$ J" ]0 w; \# \% Z
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1% }; ^" q" G4 j2 ]2 a# @1 p
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
; g% R1 a; R, s/ [4 {# m/ r; kaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
% F" H( j. T1 j$ q9 a. PCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: A: m; N# O* n- g/ ]
positive for the year-do-date, including high yield.
- p4 E, a/ F, J- x6 I! ~ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' @3 x3 `* |; Q* }2 k9 Mfinding financing.# F4 k- a: B0 L/ P% J
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. Z$ x5 F- U W. C' uwere subsequently repriced and placed. In the fall, there will be more deals., R; t2 P- e8 ^! S8 Z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and) V1 ^% w: Z8 [, b! S4 c
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# P p6 ^1 o" l) Q
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
; l8 @9 {" V& _0 Bbankruptcy, they already have debt financing in place.# V4 }. Q2 Q! N3 q
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain+ d8 L G, J. r3 I0 X' G
today.
9 C& L! }/ B; z/ [2 N Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in. m- p7 v8 [& e
emerging markets have no problem with funding. |
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