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发表于 2011-9-17 13:16
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Current situation
- I+ d* z2 q7 `0 g2 l2 R0 \4 c The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long4 t& ~; A5 n& x& o6 d
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& d$ t) F b" F! W8 b
impose liquidation values.
2 @1 a$ x! l" U/ x: Z4 u( z In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
. g* u0 n* @- y O; SAugust, we said a credit shutdown was unlikely – we continue to hold that view.
% U7 R2 a! a/ ?0 ] The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
8 J, K1 N& k. a2 `( ]scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
$ C5 c% i+ W% v+ a/ t7 h2 ]+ |6 u" ~
~6 ^0 i8 I2 uA look at credit markets# T1 A' g: O* o" v3 A. P
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# J: T. T+ P/ Y! y) |6 |% ~September. Non-financial investment grade is the new safe haven.
- R. {- G \2 {! g High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
2 b; ?( @$ |0 X/ {then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
( s& d6 g7 \* {2 A& U, P. {billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
# z1 g2 k { n* C/ Eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) Y3 p. V- M+ \$ J3 X
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are- o: T d0 P% X g$ w
positive for the year-do-date, including high yield.9 W" [; y/ }% M& B; P" p
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
2 d5 R& ]: Y/ v8 A5 K. z$ U Q7 \finding financing.
# K' _0 h$ m6 O2 N; y Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they" [- G5 L& K1 N n; ]' H( C
were subsequently repriced and placed. In the fall, there will be more deals.
5 v. x2 t1 E& F' a' R2 T Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 ], p4 n/ f" y8 s! ~. R. C
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' n/ ?" @% Y! q" b+ X& M
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ Z6 U, r8 ]. T0 S' I$ wbankruptcy, they already have debt financing in place.
6 d5 U( |+ Y/ S. O1 n- Y European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain& A6 o2 p H. e, l3 Q$ h* Q
today.0 N& g) X" _' D/ U+ [* Y; i2 ~
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
( B" H( i0 A) M0 {5 gemerging markets have no problem with funding. |
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