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发表于 2011-9-17 13:16
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Current situation
5 I/ R; v- N& N% I. A. C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long. Y4 \6 k. h5 Z( y/ a1 W7 U5 E
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
2 `9 M9 W4 X2 f9 V6 Gimpose liquidation values.
# M! B1 P- B. R# m6 F In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 o8 f5 F! I A8 U( a6 u1 _
August, we said a credit shutdown was unlikely – we continue to hold that view.: c! ~1 s6 _7 D* ~$ w0 [. h; C: _
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
, K" y6 x% v' Y, J4 d2 s5 hscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! X2 t$ U+ O+ r
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A look at credit markets
/ ~$ G% H% e' L) ` Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
5 h3 F4 ]/ L* Z( p5 y; uSeptember. Non-financial investment grade is the new safe haven.# B5 P# W. ~: B# H% [9 v: F
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%7 E6 r6 `0 O, ^. G9 P) y% V
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
/ \2 Y+ ?/ p- {% g8 ~1 vbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have7 I8 n% D! u. f5 B2 r
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 ]+ i; [8 {, }6 m. {* F8 g- [) g
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are) W+ T" N) n7 s- @* i# _
positive for the year-do-date, including high yield.( D1 S& j& a5 e
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
) Q, B3 L( H+ P$ \- C$ P% t; Afinding financing.* U; k1 L/ ]3 E; G9 a9 }
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they5 @& v" D" b* A( v) X
were subsequently repriced and placed. In the fall, there will be more deals.7 X! R0 x+ A5 M7 q# d+ U+ m& ?
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 t: h$ L- O7 m5 `& N9 i3 C' a$ w
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
7 X L2 H7 o i) {4 J2 }1 Sgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
% i. y2 B0 F- a* t% s$ w1 Sbankruptcy, they already have debt financing in place.; T4 y0 ^" ]/ T0 e8 I9 k/ `
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
: l) a/ q. _. R3 T- c$ Y" ttoday.
% L# ^5 C* n9 s# U' V Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
. G9 `. Q4 A3 R7 H0 Vemerging markets have no problem with funding. |
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