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发表于 2011-9-17 13:16
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Current situation
6 J) z7 d: X9 q+ a1 o The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long+ g& Z' r: `9 a5 m
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. w+ C: H4 M8 y% X7 q. i- N q- vimpose liquidation values.
2 t; y, w3 g! M" v) V, d# ]+ ` In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In8 h, b2 C' Y5 d
August, we said a credit shutdown was unlikely – we continue to hold that view.
' R9 H& l; k2 h9 z3 p% C/ y( N5 F$ ~ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* O% E- n- s9 J
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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9 p9 v5 S) W9 F9 J _A look at credit markets
1 n2 ] k2 F6 b3 Y! _ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in8 T8 f# \: y) K8 w
September. Non-financial investment grade is the new safe haven.) T V& c$ b _ x% C% L, p$ ?
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
6 r* J. s2 ^( m3 I* L4 n4 kthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. s) w5 z; \$ d# `
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- F4 j4 L8 {; m. t
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 M9 \ G1 G4 q4 q3 DCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
: U, S5 M" T2 m0 ~% wpositive for the year-do-date, including high yield.9 ~& r6 }9 i8 R0 e2 A9 H- u
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' e, s' c& h' u6 ]2 L" qfinding financing.
' v8 j# K9 m+ d Y1 \4 \: E6 K Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% m9 M' Y" d0 `" V f: J
were subsequently repriced and placed. In the fall, there will be more deals.
8 G- Z$ r$ w9 u Q/ q4 | Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
$ A5 v" G$ B! l! i) K1 cis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
4 E4 u) @$ G6 r, xgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
5 Y$ ?) F* U* g5 {- mbankruptcy, they already have debt financing in place.+ [$ ~9 P( W c6 w. Y; j
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain0 i) X/ M' {* D3 F7 @4 H
today. U5 a7 Q0 R, f/ |, y! j
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 U4 C; ]! |: O" b4 Femerging markets have no problem with funding. |
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