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发表于 2011-9-17 13:16
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Current situation
0 ~* w$ ^- H0 q The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
$ m" c! E" y% G8 _! p* Qas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
% x' d# Q* ]" a% M) g6 z# Nimpose liquidation values./ ?: _' E5 p$ S( b/ [/ ?5 w0 q8 v% h8 y
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
$ A; J6 @) K; qAugust, we said a credit shutdown was unlikely – we continue to hold that view.
- m' Y+ u9 j) x" c* D/ s, B9 y7 ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
9 b# `4 |6 t2 E: H4 p0 w: ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets* f* ?8 C2 W4 i
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in. g7 w) b! S, R' E. v
September. Non-financial investment grade is the new safe haven.
7 F. w A& Y6 j High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
$ j2 H1 ~6 r! z/ L; ~8 @1 ?then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
]7 A$ k" P4 X- T7 w/ }7 ]billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have+ D& {( {$ U# @7 v3 C
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
1 }3 F/ \9 `) O" _; s# z+ T7 v% ]CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are( G' p! M3 ~( K9 [, ~4 {
positive for the year-do-date, including high yield.
1 n+ R6 C% H! j& a Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
% |* ]! O, n& }& ofinding financing.
+ H! b6 W3 `" K3 b1 g4 k( | Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they; [8 c3 T8 f6 y; g9 e( W! o9 I8 Q
were subsequently repriced and placed. In the fall, there will be more deals.$ K8 D) z3 m4 G- N4 K# ?
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
1 h" \0 s' ^# cis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# \/ Z- o0 C1 R0 r' E
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for0 [( f. L: \, a7 u5 F; i
bankruptcy, they already have debt financing in place.
: B7 T3 \( ?6 e. {( U5 C- ]0 K; ^ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ L* V+ t m: X
today.
- o4 z- e3 p5 i Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
+ Q; Q! @' r5 R, \emerging markets have no problem with funding. |
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