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发表于 2011-9-17 13:16
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Current situation
6 x( S" j. f2 z( W' C$ I& b: t The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long) s: u; N2 D0 y: ]
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 z1 w% v$ b- l& ~, I% Dimpose liquidation values.
; W: E6 V; s! c9 y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In' t* b% P2 S9 B# B
August, we said a credit shutdown was unlikely – we continue to hold that view.
9 [' l' \6 @/ v! V( {+ u The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* W9 y! M% x0 J3 N! r2 \4 j
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( ]) O% G3 b7 s2 X
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A look at credit markets9 x; ?, J" z+ G g B% L. g5 s0 a2 T* }5 ]
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in S2 k, k* Q1 f! j7 R% C; h
September. Non-financial investment grade is the new safe haven.& I, d7 ?4 J; F
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 v- I3 k$ Q: d' `/ n9 y8 ]
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ y; x$ a& h( g2 b& v% X: _3 `, Gbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have& T0 y, K; P, \/ s) u: q8 W& E4 G
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade. o4 B1 K; {* b# [- {$ h& Y$ M! Y" |
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# K9 C6 ?) X( J9 m( {) \
positive for the year-do-date, including high yield.
0 H) u5 G' x3 V: Y8 ?- M Mortgages – There is no funding for new construction, but existing quality properties are having no trouble% G' Q; s$ m; r8 F" \
finding financing./ w4 }( t0 {" o$ [0 @& S. q; ^
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they d: D5 v7 Z) f7 V% R
were subsequently repriced and placed. In the fall, there will be more deals.+ a- N% s) t% t" ^- s
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
; S/ O- `# Q+ y) A; R Ois now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 Y+ z) s: |* q/ J) y% zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 x) _; Z0 G& Y. K: ]$ W
bankruptcy, they already have debt financing in place.6 |- L+ z; d$ T4 u: X! \" Q' M
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain5 g) D- M0 n5 y; F0 S
today.
1 w6 U/ o! `* H, |6 i& g. O+ x' m Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: V, S, G. s1 f, @( }4 f
emerging markets have no problem with funding. |
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