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发表于 2011-9-17 13:16
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Current situation' B, y9 \- c: Y, h3 Y0 G, g
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long1 n4 I- y2 U0 G- Y! Z# v7 J
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may% a% g* b$ T) [0 m2 z8 N
impose liquidation values.; `4 ] O3 F2 M$ v# f
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In- ?- v0 R" \; c, |4 Q, c: Q
August, we said a credit shutdown was unlikely – we continue to hold that view.
2 F% p4 K2 V K, e, ]' G The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension! [1 G8 b6 N$ H- `6 s1 a( W" y
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( G' q9 W7 g1 I7 q4 @: p0 J% J' Z
( o( l4 [& a* X( n, e9 iA look at credit markets4 T2 ]0 t' x8 |
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in4 m, \: a% e5 |2 }* V
September. Non-financial investment grade is the new safe haven.8 [1 n5 g/ u" {7 K
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7% E$ d+ h) h: r6 z$ f2 G& V
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $18 `) O9 K6 l& V4 u3 H
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 s ^& C6 P1 r2 jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! K; j. Q9 r7 {) T- s/ I% j, ?( _3 V
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are6 y$ e" y8 T, [: W6 K% Q1 s
positive for the year-do-date, including high yield.6 B/ j3 x, E, i! m# S
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
+ V+ x* L9 V$ { t; {0 qfinding financing.# W7 `# d" b& Q) q
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 A7 ]% X" u, c' V
were subsequently repriced and placed. In the fall, there will be more deals.+ }5 Z& a7 _8 A2 q6 V
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
0 S, Q: s9 S' h) Lis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were4 n- P& M% S. W: K
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
& g6 x% Z7 L; o4 `3 G$ Hbankruptcy, they already have debt financing in place.3 H* F/ a9 {7 t* c+ R8 @. `4 d
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
% D |5 H. @# r8 Stoday.- V( V3 R1 B; A. I6 y/ b
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in* m& Z4 w3 y! N3 K: A0 X
emerging markets have no problem with funding. |
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