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发表于 2011-9-17 13:16
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Current situation
2 T1 _1 T% M$ N; e5 y* I [ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long g" ]8 H6 N- Q% [% R
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
2 R3 ^; W( m2 n4 w% k1 K6 t2 ^impose liquidation values.8 h* H0 @# w: n7 a
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
6 N1 [: c+ \0 d9 @August, we said a credit shutdown was unlikely – we continue to hold that view.
4 b3 x% f* ?% E0 D1 R9 m5 V7 X The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension! e, c" d6 `) X2 d* l- Q7 {
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.8 R+ ^' ]8 g- m7 y& E
& |% a- {/ u0 A5 {" t1 v6 o3 EA look at credit markets; y e4 Y6 F7 }; w% [
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in* N1 E& H! k8 Z/ ~: q
September. Non-financial investment grade is the new safe haven.- e( ^2 c7 ]. S+ O0 `
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
1 S, \+ k. j4 Nthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ _; W& \1 F4 v v1 C! o1 F* U2 Zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
/ S# {/ ^9 M9 Gaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
8 b+ |+ L" H$ w; v4 l; U. PCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are% Q. S. i4 J# G% b
positive for the year-do-date, including high yield.# Z# u4 |) R- {/ b( M5 p% b# [. E
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
5 K+ R2 x# i# P8 K2 Y: Mfinding financing.
5 t- s0 o- I J9 ]. X5 d3 b6 { Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
" y: \$ c( R. i; g2 o# a- p1 Fwere subsequently repriced and placed. In the fall, there will be more deals.
, b7 a) y) U8 d& S Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 v$ \1 z$ _7 [ k( p7 j6 E8 i+ Eis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 }( [/ m6 G4 {. Wgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for% C( x! ~/ H$ b
bankruptcy, they already have debt financing in place.
* R/ @3 x* d+ Z1 y+ ` European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 b+ \: E2 A1 O1 H
today.* _- T2 |% C- j D
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
, m6 D T3 A( C% k6 L1 M. k5 {emerging markets have no problem with funding. |
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