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发表于 2011-9-17 13:16
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Current situation
- [9 U- H# c* S' G9 J/ R1 n The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
6 c6 }- y; g; N% l& w- E uas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. T7 b/ ?3 m8 \4 M" p
impose liquidation values.) X; {* C% _2 l( l' K
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) j- b& p/ G& |August, we said a credit shutdown was unlikely – we continue to hold that view.- P, u6 f5 U+ u! C
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* W7 p( S* C2 s0 R y9 Q' g
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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$ `( t. y0 w! \9 b6 bA look at credit markets
# u( C3 q% w* @/ M8 ]) }/ } Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in; t5 T' W7 @( |) `2 M
September. Non-financial investment grade is the new safe haven.& s7 m+ i, i; T' a1 M
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%# D2 i" y& V/ x# T
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
+ u% u9 ^6 G0 `' k" q1 zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, } u' q, W8 L& _access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
% U! i" y" r1 s( z) y5 C5 r7 VCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" x9 B- f, v- ^+ Cpositive for the year-do-date, including high yield.* e) o, R# z; ?8 _
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
1 Q* _ Z; A7 b- Ffinding financing.
1 \/ q5 O; f' l2 e Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
' j# u+ ~. y5 Z' [' L5 g6 y; n& jwere subsequently repriced and placed. In the fall, there will be more deals.% M; z' t. ]3 ^7 V/ q
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ F8 D/ k1 v, h8 k: c7 [. [
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were, M1 }: ]: q+ q, R& u; I( m
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
9 g" J* I* L$ n( Tbankruptcy, they already have debt financing in place.
6 s7 D8 s' b9 l/ q5 O5 f% T: b6 N European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain3 V( N8 \1 ]! T3 q
today.
9 ~& c, G: y1 K) T Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 ^) ]( d: ^+ C R1 Y: kemerging markets have no problem with funding. |
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