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发表于 2011-9-17 13:16
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Current situation7 `2 W$ @1 j3 a; W
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long% A8 u+ V3 d& {" N' Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may( n/ y; |, O5 K$ j
impose liquidation values.+ r" p$ r3 ~" H7 z
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
! M' K# l2 ]: W6 K; f) |August, we said a credit shutdown was unlikely – we continue to hold that view.# D' [, b/ P- T/ N0 [7 C
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
' n6 e8 Q4 E: R- J2 T7 l5 Zscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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) Y1 N1 W" o: T" q3 i7 C, uA look at credit markets1 y" u3 e" w- G, s
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 |7 u8 E) {# A( `8 O, ^
September. Non-financial investment grade is the new safe haven.
) d1 }' d% q3 H4 q High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%% {, }( W8 Z6 q2 ?. d! w0 f
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1* F( ^ r9 O/ e& s+ K% ], R
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have$ n8 i. s* y2 {1 N. a4 x) T
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! C$ @& Z9 f1 k/ H' T/ U
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 o* m' l. s* B% ? @' u7 Wpositive for the year-do-date, including high yield.1 M+ d- O) L+ t# N0 p: d7 q U
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble: w# W3 T# g8 G8 [! }/ Q6 j
finding financing.0 m- E, i+ |: M O; J
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they; R Y2 w+ N* A& x. s* y8 F$ H2 H
were subsequently repriced and placed. In the fall, there will be more deals.
/ Y- u/ [, I% B B9 p- |/ I Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and5 v% U k& x5 C
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
1 G8 C7 E8 X* P; S& q$ dgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
6 H9 W9 A G8 l: \& vbankruptcy, they already have debt financing in place.
4 w `. k6 L3 @2 s3 l European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 D: k* y/ z* `2 ytoday.
( Q# L3 [8 _- R9 s/ y- P3 w Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
; q4 G: D) U9 B J0 U/ G. Uemerging markets have no problem with funding. |
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