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发表于 2011-9-17 13:16
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Current situation
( J* ~# b3 o' b The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
) `! t! m6 `+ [( p+ jas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ L) ^0 u: E2 b1 timpose liquidation values.
; S& `# [; @, M In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
2 {9 k7 h$ U! R; n) XAugust, we said a credit shutdown was unlikely – we continue to hold that view., d) R$ Z" X4 t$ p
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ W# L; ]4 r( J1 ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets9 R. n3 E& a; D* g3 u
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: e [0 @1 M3 {8 p4 h( E2 G$ zSeptember. Non-financial investment grade is the new safe haven.
- p. e: T V. D, C High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
2 m* b+ N/ O4 L2 j0 [then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
" a& m$ B1 t& }billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have+ V5 _& \/ m2 Z8 x
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade6 x, X" x% ?+ P. B
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are( o& V9 z2 Y2 h. `
positive for the year-do-date, including high yield.4 q% R, O" r8 S8 s9 Y% r/ N5 j0 }
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; i/ T' i% k3 c0 m( H$ R
finding financing.
+ l( p- k5 X3 ^/ q! X: _* {9 { Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 w v) X' R; H& Q. s% v
were subsequently repriced and placed. In the fall, there will be more deals.% T4 W1 R' z/ }3 U+ D0 d- M B
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and2 L' {6 @9 s6 g+ }! I: v
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were% G& \8 b9 x U4 C$ d8 Y$ x
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
# u* y# O# V6 t' ?) `) Hbankruptcy, they already have debt financing in place.( L/ g1 H4 e; ~, O- U1 c: p
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
7 h5 f! I! b4 c- T& ]6 `" T- I1 ctoday.
( u& A3 P* y, T2 J# |8 C2 x Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# F1 ?# p. S& I5 P4 S8 A
emerging markets have no problem with funding. |
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