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发表于 2011-9-17 13:16
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Current situation! D/ `3 [9 o& O, n
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long" _- y- ]. c) r2 S x0 J. r
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may3 x) r" [0 [0 m
impose liquidation values.
' V& Y: I5 K$ g/ T In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 Y6 s2 {& U8 y9 k, B
August, we said a credit shutdown was unlikely – we continue to hold that view.+ R/ f# ~) s- _6 m6 s$ D
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension9 F5 \7 A- f& G$ Z8 O+ _
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.1 R8 y; O5 @. X( F9 _0 S
; Z# g1 O" C! mA look at credit markets
; w# Y3 [5 h+ P% B Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in5 t3 O- D* l/ e' m1 ^2 T
September. Non-financial investment grade is the new safe haven.
8 u& t8 L5 K4 n) f/ {4 L j: Q2 _: j$ e High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' t. n2 H, w- V, \
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1( Z% j* g. J, |0 s. [
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have+ L8 A0 ~2 |$ A* @$ d R" e" p1 k
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
+ L) ~: T \; b$ k. h2 y0 aCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# K! o6 |" X! u$ u: K/ f* q
positive for the year-do-date, including high yield.9 N( d5 N' h! v. s' j/ j) r
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
- z1 Y8 n {1 E0 ?$ Yfinding financing.2 O7 [1 W) D3 i
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 P6 W% E9 B% S E! h G4 i
were subsequently repriced and placed. In the fall, there will be more deals.0 T* x- g- `/ ?- ^: t! Q
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and5 t5 o# j$ Q4 N' l
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were/ T4 o+ @" y6 Q/ M# r; h
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for, v! a( j8 {9 c! y, w
bankruptcy, they already have debt financing in place.
! G& v7 F; M0 L' ?& w, Z0 } European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain& f% ]3 f/ n0 X2 e
today.
8 [& N7 [: B4 A) w Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ A$ G, Q" f) U3 o8 Jemerging markets have no problem with funding. |
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