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发表于 2011-9-17 13:16
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Current situation: x* x8 \ k" W7 d' C. V8 f0 h
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& A7 g- F. d( [* l& u- {
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may+ C/ x8 u1 O, J- N- l" R
impose liquidation values.7 J! A7 ` I3 f' N& P8 D l" F- Z' L
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In! v6 L: N! Q/ F( w! H
August, we said a credit shutdown was unlikely – we continue to hold that view.
! h+ r( R- V: k8 P- g' D The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
8 | T$ N0 s! _7 h7 ^5 \6 `scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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6 O, f; N% e; i3 H8 N4 k: \& \) ZA look at credit markets
, A% o) f& `& a Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in4 y* y, A+ B/ d* P
September. Non-financial investment grade is the new safe haven.# Z( w! y- T3 v' j
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
# B' n. I2 m7 gthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ T; `# }6 T9 |4 I6 a1 @& \billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have: K& D) G# |- w! {; f/ w7 C0 Y$ r
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
. a; j! ?- @9 |( Z: s) M$ YCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
, g! q7 z* I' u. f# S! i jpositive for the year-do-date, including high yield.
( y& k% i6 A U' @5 z2 O Mortgages – There is no funding for new construction, but existing quality properties are having no trouble4 H/ @7 s& a/ |6 [
finding financing.8 w0 P% S: k |, }5 _' J# B
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they9 F- {3 f+ K- \% x3 x
were subsequently repriced and placed. In the fall, there will be more deals.
; D7 L* @. Z& p/ f c Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
7 G* J, I O3 q$ W, wis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
- g. w' t. p! z2 @! D fgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for4 |+ ~8 D/ F, Y0 F4 K# J% r$ F4 f
bankruptcy, they already have debt financing in place.3 n2 w. Q, i) t, `+ ~. E6 E
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
( l5 x+ ]1 x2 m9 Ltoday.8 T2 c% ` ?. M6 ]" Q
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
! ]9 b3 \9 P% B" S/ `$ Y6 g, semerging markets have no problem with funding. |
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