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发表于 2011-9-17 13:16
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Current situation
' L& u; Y& w# Z! R8 @/ T! b The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, y4 ?' z; H* W6 u+ g& ~
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
7 T/ E; ~, [* T& |impose liquidation values. r4 U6 x; d, l: E! i/ P, T" D9 |
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In% }0 S+ u7 i! X: h& A% h2 k9 o: q
August, we said a credit shutdown was unlikely – we continue to hold that view.
8 a- P" f2 T7 d; L5 ?% I; X7 J The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; i% @+ n# Y+ c
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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/ B. T) Q8 b( e/ F, ]( SA look at credit markets1 A1 {, ~( G" m* Q
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
% F6 G0 Q5 D* ?3 Q; E- S n/ h) JSeptember. Non-financial investment grade is the new safe haven.
1 h- {* Z1 K: p8 ]/ S$ y High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%& t) v5 z( s; ^: o" Q8 `% b
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
4 [. r4 }, E. G9 K5 [3 W3 `billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have* p& X- ?- |: U4 r2 L4 _/ r
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
. x) v* Z0 b3 V: PCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; ^8 c" J+ |9 Cpositive for the year-do-date, including high yield.) M! O2 K' a8 j4 u; v/ E4 l
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
, \8 i b& [8 x! y& L; q1 lfinding financing.5 ~+ P# }+ B3 l# G+ I6 X( T8 ], o
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they9 Z2 N: d5 N2 A9 Q4 m
were subsequently repriced and placed. In the fall, there will be more deals.! p. ~) ^) w# {* ?7 x/ H/ |
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* S$ Z6 t. O9 O" w. His now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were4 c6 N$ B/ C) ]5 H: n
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
5 d& ~0 q ^- X+ }/ D' S, Rbankruptcy, they already have debt financing in place.
/ M7 E& [2 B0 {0 e: F# Y8 M/ K- w European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, ^8 ?/ @5 e( ]+ ^, Y1 X
today.
$ W6 B, K+ Y1 }+ a8 A7 k& ^ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ P- m; l5 [, d3 o: Hemerging markets have no problem with funding. |
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