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发表于 2011-9-17 13:16
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Current situation
% E7 e9 z% Z K, p9 h# d2 e The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
. T8 J/ K9 ^0 T% s* Aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may5 J7 q: B) e7 V2 \
impose liquidation values.
$ [4 M) a6 c: j7 i2 g In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In @( n6 ~5 h0 T: C! ]" e( L
August, we said a credit shutdown was unlikely – we continue to hold that view.5 P1 [( ^4 d& C: S
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
0 v5 T1 Q4 X' z4 ?! i) Ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.) i3 p, w* X* U+ Z
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A look at credit markets
$ u2 k. }- H9 V+ U7 u1 n Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- l% Z+ w$ H! W, B6 E3 Q0 m* b& X# O
September. Non-financial investment grade is the new safe haven.
' n. W2 ?5 k9 g; b/ T High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%7 M( u `- ^& B% R
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
: d- e7 ]' E) Y' i/ Lbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
9 z* O3 L8 `9 C: P. F% jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
S; R$ {) j# P: I y: JCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
. \- Q r( ]( @/ Ppositive for the year-do-date, including high yield.
/ W" P) O9 M" I* k Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
6 ~/ `3 G0 L; u, j2 j& tfinding financing.
! K4 C; f" u+ |. M Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they: N9 X+ M4 d9 o
were subsequently repriced and placed. In the fall, there will be more deals.
' ~. C: j7 V. t( R, p1 `; ~ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and2 d( B1 s6 z/ M3 ]; X
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 \1 u2 R, i, Y* Zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for% T( p4 J: m+ f6 P
bankruptcy, they already have debt financing in place.) C# |$ x6 c- g6 |
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
! c; n; j- ~4 F y5 C& I$ \' p5 t. jtoday.
+ y6 ^) w+ p4 `; `5 U+ ?) [1 A Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: ~) T" X# ~9 Z! @3 \# s) I
emerging markets have no problem with funding. |
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