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发表于 2011-9-17 13:16
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Current situation
8 P7 W+ v' @0 T7 @' P The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
A7 u" v: C) Q$ f. k, o% Was funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 J- v* J: h0 ~; U* b( D
impose liquidation values.
9 l! L7 N% l+ i/ { l In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
, z q& v& w; O2 x0 R# ZAugust, we said a credit shutdown was unlikely – we continue to hold that view.( x4 H S' p2 I2 u
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ g( A3 A4 L6 s9 z7 G" X6 o z# Uscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.8 S5 L( h( S' `# Z% T
( h; e% J' q4 g) g# _" QA look at credit markets
# v4 d' ~0 U2 d Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in' f8 q* g$ B3 x. n; M: @
September. Non-financial investment grade is the new safe haven.
# x) v O: S h5 Z) n3 a- z" f, s9 @ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 l2 P7 H/ R! L; N
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 T# y8 B4 }- Z2 x7 s9 [7 W2 e5 s% z
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' f" S! S7 W# G! v# i% K" X8 Eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade8 {8 Z7 v( D& B! r$ M8 J/ h
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* Y& e% w, ?/ L5 Z& m" c
positive for the year-do-date, including high yield.8 P6 I6 W# u" L: V# p s
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
# r) D7 g* S, {6 S. gfinding financing.
0 g0 W! U) e! q1 v# N Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they* d; E3 f. Y! _- e1 c6 i
were subsequently repriced and placed. In the fall, there will be more deals.
( [( \) _& d# l% G8 a2 o! D Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and' m1 o) X" @' G' }# _( }
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
+ o4 \( P* c6 E% j9 b2 P/ C3 p1 P5 Lgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
- D( H4 z' o5 [+ ^: N, q& D$ ybankruptcy, they already have debt financing in place.1 q0 Q9 w# h5 m7 ~ B, Q
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain2 D6 V( P7 g$ q# Q' Q, y
today.
0 {- d3 t, b# m8 K1 E* i Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 T! y# X5 ^6 R* q) @8 J0 lemerging markets have no problem with funding. |
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