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发表于 2011-9-17 13:16
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Current situation( Y W- F& u5 s3 N; \
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long7 G+ W0 t% y' m2 I0 B4 k$ I
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
( F; ?* Z4 Q. G$ Q5 Aimpose liquidation values.' K2 R* A/ F( n) ?* r3 ^
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In v# d/ W( o7 l/ {; x+ }9 J6 j% I* ?
August, we said a credit shutdown was unlikely – we continue to hold that view.4 V& S* C' M% X( a# ]% ?: a
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. b5 Q' P2 A! j: G# W6 h$ Q2 z1 M
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
. x% V& D4 m& Y" D- \, M1 D Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% A- S9 G( j. A$ P- W0 ^. T
September. Non-financial investment grade is the new safe haven.
6 p% ^/ u! E! Y; ^2 f; U High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
/ I1 O% T2 a3 o% R6 }then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $13 m& f' ^/ l4 q; Y3 Q* c! j- B
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
5 u5 N/ n9 V+ B3 O! Aaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
. @+ F- T4 U. ACCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
J U b. p% U: j- g; B/ X. wpositive for the year-do-date, including high yield./ N9 d6 X [# a) G$ V, v4 {3 Z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
# R7 T, s9 h: V# `2 C8 pfinding financing.; P# a1 a# I7 g4 d: P
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
% n! ^, y: b0 a( P$ g) n% j2 Kwere subsequently repriced and placed. In the fall, there will be more deals.0 B4 f) H. P4 H( C& M
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
) j; w. r+ F* Qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
4 F+ ?% U, q% A+ ?& E. d3 j1 i, w7 ?going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" A, s3 m& X1 c2 h' m
bankruptcy, they already have debt financing in place.. K% G& h. @& T8 l
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
7 x, M C; `3 ?7 Btoday.
8 G, n' L* e, Y! C Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
: E5 T m: [$ N& Eemerging markets have no problem with funding. |
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