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发表于 2011-9-17 13:16
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Current situation
% q- n" R* K5 g$ k The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
- b+ M- h# w4 vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
+ D) | I r! B3 n4 \impose liquidation values.
9 G1 W, ?4 n/ V In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In5 e$ u* M* h, U. P7 g! }
August, we said a credit shutdown was unlikely – we continue to hold that view.6 H- S% I; P5 D3 e' M
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
* q c% f+ M! R! g% d) x4 s; Q* g# Oscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.5 O+ a0 V5 r' F* k, S+ g9 V% U
$ k& Y5 c6 G+ l4 N& z: v4 r
A look at credit markets, ?' ^5 L. ]2 r3 I# v) l+ d
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
~3 g5 L3 r8 ^4 t2 |- nSeptember. Non-financial investment grade is the new safe haven.
; F' l8 q$ N T! ^7 k6 n v High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
& n g5 E7 O5 K9 V, Q% E4 H sthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; \0 f! W# h1 g! V7 h4 Hbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
) F1 t4 a# R/ l) G8 {2 N, F. {access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade: j. k8 ]4 e" Y: H) C7 `( J
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
2 b& V! ]; w& {. t* q5 Upositive for the year-do-date, including high yield.
! |' C8 m9 P5 S' A; q Mortgages – There is no funding for new construction, but existing quality properties are having no trouble7 A+ N0 c2 {3 x0 O
finding financing.% G; L, @7 B9 B. F
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% w6 o6 ^2 `6 |9 q1 r: k& ?& x7 k; D
were subsequently repriced and placed. In the fall, there will be more deals.8 _! j- i2 x% G8 t" e$ F: Z* C' w, k
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
; _- j8 I9 v" P, ^9 E1 H# i' H3 @+ H Tis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ A: g% n- i7 a G6 Z6 k* sgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for# m) h% P2 b/ }
bankruptcy, they already have debt financing in place.
. z/ i9 |( g+ y' b0 K European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain2 s2 K# L) R7 H& Q
today.3 U1 R! o& m, d8 m: R
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
* k7 _, i) d0 n3 Oemerging markets have no problem with funding. |
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