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发表于 2011-9-17 13:16
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Current situation
; M) [0 H8 y% V The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& x7 a @$ t1 B: e9 Bas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 e, l& \9 u* zimpose liquidation values.
6 T- \, M( Y" t5 }' E! h* e In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In- u$ \! B9 n" r) Y$ b
August, we said a credit shutdown was unlikely – we continue to hold that view.
9 h7 m$ W5 e; ~2 @" [& M The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension/ `. }/ V% N- [
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
* c: C1 [9 {5 V; D" p Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in, z% }1 ^5 h& Z9 l9 k, s
September. Non-financial investment grade is the new safe haven.
: ]; \6 C/ c3 O. e( E U N High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 v# t& x' D4 U6 i
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
! G6 W1 E" L( K1 A, o- K( u& _billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 C4 C% f1 n/ U' Z+ Q# faccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
7 _/ c* [' o/ K9 DCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are- q8 S" r# Y+ m/ t* T: s7 Y; g
positive for the year-do-date, including high yield.
$ @ l7 R# w/ Z. q% \2 o" j( ?6 \ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; h, S) H) e7 c. a$ i3 g
finding financing., ?. i' s$ b! g- Y, k2 Q
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they. W; e' B: a, M4 B7 G: ^
were subsequently repriced and placed. In the fall, there will be more deals.
. I7 p V9 D, J: Q1 A l8 q0 X9 H Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and. e( ?) M7 i1 S: m/ K- L8 L; C
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
; }8 _; o4 f% @) J+ V' ^going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
/ S( j+ { K( b- R8 o. A0 bbankruptcy, they already have debt financing in place.( p: l0 f' ~: o2 d7 F( n
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 W% b, s, v5 B: J2 ]) A2 t" `) n& Ntoday.) g( O. C6 z, Z K q3 B* V0 \' |
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in* H! ~2 G6 m6 q' @. I
emerging markets have no problem with funding. |
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