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发表于 2011-9-17 13:16
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Current situation; W+ E$ y6 Q) B H& W$ Y
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
2 @- O. _: `' B t; Qas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may V: _& Q% B- y3 W
impose liquidation values.
9 M! J2 k% f) I, ~- a In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In, ? F. |+ y+ F q/ f
August, we said a credit shutdown was unlikely – we continue to hold that view.
% i N2 U. S& u& B) X The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 K1 w' Q9 D2 ?# w n
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.% [+ X) V6 U( L% o" v
# ^; _' h8 j8 X
A look at credit markets# Z/ t) j% J% s# K$ }% y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
. b. {+ C# A, d: D x, g# bSeptember. Non-financial investment grade is the new safe haven.+ _6 P0 `/ E1 P7 g {. f; e
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%% Q, s: ?# x% B/ x" w
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
: a6 I# m# @* ~: Ebillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* Z1 @, i! ?4 {% m+ Taccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; Q6 d. r( x/ _4 N: P+ M9 M( H/ ?CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are y# }* B& z( X S/ t
positive for the year-do-date, including high yield.
7 d* L. v1 X! g/ C- E6 J* p Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
2 W4 m6 E( B' L% f. Qfinding financing.7 d; O. M4 u( G# n( c" c& ~% M
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- s( |! t* g6 c0 w
were subsequently repriced and placed. In the fall, there will be more deals.7 ]. U& ?; y+ E; ^$ F
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* w$ m/ ^; o' O% E, Tis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. \- Q0 _4 u- I1 Ugoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for0 B/ Q! D, R" X, A
bankruptcy, they already have debt financing in place.% z" B6 {7 }7 F S: V" n' s
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
1 H3 _2 k/ @5 r. B! X! t, stoday.
d% u% v e& O6 f Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ Y* e' | k1 Zemerging markets have no problem with funding. |
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