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发表于 2011-9-17 13:16
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Current situation/ w$ W# h) I+ m
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! y' K: F _. ^+ @! s
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
- b* D7 E E* x. @- W4 x( j; Kimpose liquidation values.
3 c( _' h8 U+ z+ h% O2 Y. ~ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
: q# Q2 i) m% X' \' `) iAugust, we said a credit shutdown was unlikely – we continue to hold that view.2 H8 [3 w( f" a1 o
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
5 F; d% A2 a. S0 u7 e" gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.& L$ @2 q0 O M& B4 B( z
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A look at credit markets
, X& \1 O4 L ]% Y* h Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in, o8 E9 \5 U6 s9 Y6 I0 w
September. Non-financial investment grade is the new safe haven., ?" `' P, p1 l, W" @
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 R8 J! n- G- H' q4 j
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; n0 [* L4 K, R" }( K2 Q8 sbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! y! @& I* P8 M [3 z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
( k( t( T9 g5 w! T& F# iCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
3 s f3 c( Q4 |positive for the year-do-date, including high yield.# ]# [5 v5 W( M" U
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble" x" ]7 d: i3 S( F* g! z
finding financing.
4 H9 V2 v( D7 Q3 f$ D7 ~, W Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 r/ r* x9 N; j! K( h$ g& F, Dwere subsequently repriced and placed. In the fall, there will be more deals.
) s9 E$ t% Y8 j9 m# a& G Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& p% l3 C; l/ h
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. H, j& O, E) A: X# `2 S9 g0 ^going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for! J$ y: G5 G, x! {/ v% R) _
bankruptcy, they already have debt financing in place.0 a- t1 a: [/ ]: T) \
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain# j: S; Y0 O( k, a6 |" m G! I
today.) s1 u+ V2 ~7 W; n" Y1 e
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in( Q! S" u2 R$ S) K h
emerging markets have no problem with funding. |
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