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发表于 2011-9-17 13:16
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Current situation
. `, n! m( G7 N* N' q! Z7 k; K The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 @: d4 e# c$ h1 t0 T
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may" I6 I2 n/ Y# o
impose liquidation values.
. j/ w0 e N& r* z" [+ H8 G6 s+ g8 M, g In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In3 P1 Q1 X* J5 s2 K! Q6 M6 J
August, we said a credit shutdown was unlikely – we continue to hold that view.' e1 b6 i3 C& o. f. A/ a+ X4 j
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension+ }, V6 q" z7 _
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
' E8 i) X% l; J, ? Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in/ q, ?; G+ v7 G# j. ^
September. Non-financial investment grade is the new safe haven.
* r; ]7 y" |; y7 h0 D* E High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
4 e! m3 {, ^4 `' l, d3 Ythen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
# h2 p8 s4 e" {6 f+ Wbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 _" z. {; `2 E% saccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
5 x ~2 C$ }5 Q9 ]3 Y: y9 {CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are0 f# c0 [5 X0 V$ z+ d4 k0 ]( ^
positive for the year-do-date, including high yield., U, @$ P7 D1 \ w
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble* C7 f+ d3 z9 d" v" j
finding financing.
" X) m+ R, P9 q# ^7 n C Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ J5 c# I3 [" B1 s( b2 Jwere subsequently repriced and placed. In the fall, there will be more deals.: L5 Y+ E8 s& I* L! W: N
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
3 S$ v% D# U* G! kis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were* p! a& [$ p+ B/ i+ U1 x. ]$ {- K0 L
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" f# T/ P; h) d: F
bankruptcy, they already have debt financing in place.
$ j7 G$ ~- J" Q" c European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 c' @% T4 V. i- w% Semerging markets have no problem with funding. |
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