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发表于 2011-9-17 13:16
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Current situation1 z' P4 `# ?) k. W7 C5 S
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long% m0 e, w. X* H
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
5 G' B5 v( }3 Fimpose liquidation values.2 V; f) M! j5 U2 b9 L
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 x+ M1 F' \! [# b! v, Y3 P) M
August, we said a credit shutdown was unlikely – we continue to hold that view.
" X: s0 s/ }8 a. [ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' \7 z' ]2 A/ S
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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% Q: ^- V+ @& XA look at credit markets
h9 m# G+ [' L+ J# i Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
) Z3 [& v8 x& }6 R+ ]) j( A: |September. Non-financial investment grade is the new safe haven.$ N: H8 Y5 S5 j& a, K$ P) F3 a% H5 n
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! R6 R* V: m0 f C$ m: |% Nthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1" R/ j) F5 t+ H/ | e# r
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
0 a" Z! N9 r6 S0 F5 h5 _access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
8 s2 f, r4 }2 w! L' sCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. R+ u) m, R1 v3 L$ d/ k
positive for the year-do-date, including high yield.+ V# u+ k1 E! M+ z7 U/ }+ L$ b
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble4 u) T- @# l+ n' R7 K/ N! L- \
finding financing.7 K6 F& r( Z; a4 e( `: B$ v, I5 u
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
# V+ [( R) v3 b3 y7 P# z: R; Xwere subsequently repriced and placed. In the fall, there will be more deals.
' c6 u: `7 V/ y Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
/ b1 E; c- }! }is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were8 D+ Q% {2 R: l' Q6 G
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
C& R7 L3 f; ebankruptcy, they already have debt financing in place.7 v8 k: M) i* p
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
1 k& X& w# t. M; r) y y: btoday.4 W1 J% o( D+ H2 ]
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" T3 }" G4 u+ g; q0 V$ X
emerging markets have no problem with funding. |
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