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发表于 2011-9-17 13:16
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Current situation" v7 s& Z' v) c. Y1 E9 {& W T, z
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long0 g) P5 _: L4 b
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may$ l2 n! _( k, \+ f0 k' o
impose liquidation values.0 ]& d0 |9 N" x$ k! @
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In- G. y3 t6 V8 B3 `# k9 H. z u
August, we said a credit shutdown was unlikely – we continue to hold that view.8 T2 W* A9 S ~. k
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
% j7 \2 J- Q. `; S: b$ \0 _/ uscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets." e/ s0 y; z$ N Y* N, v
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A look at credit markets
4 d3 h$ ^2 K' M: s Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in( A& c K" T) s- q9 W$ L( e$ {
September. Non-financial investment grade is the new safe haven., y. d4 w$ q4 l Z2 F, F
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%$ u6 Q1 N$ p7 V2 c" @' P
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1$ s0 C& x9 l4 K7 j% G1 Z
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
b4 S% l$ C& b" }access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade8 l/ a6 D+ t; S, W5 }
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
7 V! w; n0 b+ Q! d6 ]- F/ Zpositive for the year-do-date, including high yield.
9 i9 j- |# d" ~, p Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
3 G* |5 X) J+ Wfinding financing.
W0 G. m1 E' F+ m% J Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they E+ ^) a2 ^0 `# t5 v5 t
were subsequently repriced and placed. In the fall, there will be more deals.
5 T, G7 A9 a$ z9 l7 c% X; j* F* { Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
" L _9 J" x# E! k3 O5 z+ h( o7 F' @4 Nis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were/ `* n* [5 E- x+ x+ m+ C
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
5 s- I( ]9 y6 @( v+ ]- Wbankruptcy, they already have debt financing in place.
# D1 P8 N1 w! C' g3 R5 y European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
% X: e( p, W+ H9 Ftoday.5 M1 W9 X' Z5 t$ H5 \( ?
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
4 f& g \3 i" r @emerging markets have no problem with funding. |
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