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发表于 2011-9-17 13:16
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Current situation
$ A! D. T/ _" \8 \ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
- Z. p! f; {9 Q) a D( Xas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# @$ X1 t+ n3 S2 `; ?# Kimpose liquidation values.' g4 ]# X0 e" H0 E% c
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
' Y/ e% o) j" `8 t; NAugust, we said a credit shutdown was unlikely – we continue to hold that view.
( G3 D9 p& l" y The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ J$ v# b# r ?- Y
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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1 A3 Z! V3 T% hA look at credit markets, B+ n; M' N' ^6 Z# l! f2 x
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
/ F! T$ s b# Y* k3 A' VSeptember. Non-financial investment grade is the new safe haven.
, T2 O5 E8 _0 c3 u+ l* c7 B High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
# T: p6 ~9 V; Z: D2 B" wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1% k+ c& S9 t( ?* `, d* r
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
3 \2 [" }9 k. i" o7 Yaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 Y' L( w% G, Y5 K8 e% L6 y6 dCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are9 ]! r \ f# d4 U0 I0 J
positive for the year-do-date, including high yield.# [% ]' z% X. E) @6 q( j$ {1 t
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
* }9 F3 f8 x' S0 p# [finding financing.9 B% z {# D5 p4 J+ Z
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they# m" ?/ H& X$ O. |8 T$ r; D
were subsequently repriced and placed. In the fall, there will be more deals.; g7 l3 s5 C8 r
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* I7 b3 M/ j- G2 c" |* a. z/ o9 d
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were% R& `8 [3 E% _2 r
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for5 K3 Y6 k7 R* ?# r* h* P' z
bankruptcy, they already have debt financing in place.
! [& R& Q9 p& u# H. M European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
& z$ }) j$ U3 Q4 k* wtoday.
4 X5 K# m( D" ]# | Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in4 {( h" T' X `( N1 w, t+ K
emerging markets have no problem with funding. |
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