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发表于 2011-9-17 13:16
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Current situation
7 n% D# X3 n9 ?4 B The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
% @* h. x$ E' x* `9 r: M7 h# f4 M& Aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 Y; x2 n! f' |! S2 Vimpose liquidation values.9 s7 T/ J U- s( B1 G8 n3 v
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
( ~; P8 @: } s; E+ G9 s& G: }/ GAugust, we said a credit shutdown was unlikely – we continue to hold that view.1 w( M* ]% {; T+ W2 O' \8 w/ X" D( ~ u
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ m: d# D* Z. ^. Z
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* a5 B. {* Y3 y, S7 h5 W( o$ p
4 t+ r1 V9 ?) d8 ` Q
A look at credit markets
/ R$ R& x, H2 z( l$ V' }1 z9 s- L Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
* D9 A' S- B9 J# I' ~2 N/ u2 jSeptember. Non-financial investment grade is the new safe haven.1 c6 n+ v9 i4 Z6 ]
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
" f. _0 O, O s" S, K. ]0 Y K. xthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
3 T. i/ b8 N- H$ P6 N1 lbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have3 S9 C% X2 U8 e1 @- ~
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
, P" d3 E* ?7 r" L4 Y- S. qCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are" e& H6 @+ P H k* Y
positive for the year-do-date, including high yield.2 N+ G& y& w, Y! X* N" y' O
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble. [2 a& c) @- v* Q$ n
finding financing.5 [5 R; v; \4 }/ j9 X* i
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
3 x/ z) m2 z) n0 |& t& `; [. Z5 Awere subsequently repriced and placed. In the fall, there will be more deals.- q( t" p: A) H' G# x1 N5 ]! T. ~. p& W
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ V5 ?; S) Y" e* x1 c
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were6 F) p, \5 G. k) Z2 Z- U
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for3 F# D+ P) V Y, z! N5 B
bankruptcy, they already have debt financing in place.* O. T( l8 ], C) X( C
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
3 a, r4 k$ \4 wtoday.
# n0 [& D2 F: `$ [' H, q" H Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' o! Z+ M9 a5 \: P. Yemerging markets have no problem with funding. |
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