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发表于 2011-9-17 13:16
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Current situation
2 Q% s$ H! y! L8 ] The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: K8 @# z7 @; |0 I% n
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& Y% |& O- Z3 V( d/ N$ l( ^
impose liquidation values.) G/ D$ l& V2 T; o% ]+ O/ I. z
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
( M$ ~+ c- ?% O6 ~& [6 ]+ ^August, we said a credit shutdown was unlikely – we continue to hold that view.
9 Q/ F. ~1 ~ u4 H' u3 T" L l The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension/ f# W8 E% l G# ?, R) v
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.& w0 v5 b( X5 \& G
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A look at credit markets$ L$ x: v* S7 W; _
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 g" o/ u' l- g$ U. r! u, K8 gSeptember. Non-financial investment grade is the new safe haven.' B& x8 p# y' t8 M
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
. b/ D; ^5 u" [0 }0 q5 h+ ]% Zthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. N8 q1 n: E d0 z3 E' R0 O+ l
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
! w% m8 m! T( O- I, A1 ~access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
' p2 K* U. C4 @1 y: ZCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
# p$ B1 y7 y7 `$ |6 {* Hpositive for the year-do-date, including high yield.% T& D; Y1 ^ K& w: j0 D* F
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble9 ~1 Y/ {0 n, N
finding financing.! K) \1 W& D6 ?2 K9 j- y/ a7 \
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. v* ^: h# d5 B7 v1 x4 i7 dwere subsequently repriced and placed. In the fall, there will be more deals.; L0 O w% A/ U
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
9 Y1 u0 D4 Y9 M/ Z6 l6 d: v$ z# J6 His now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
- I& \7 I! I* I- U1 M2 kgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
+ z% k2 w3 o5 _3 a; g; Zbankruptcy, they already have debt financing in place.% c% C- G0 H5 b' X4 x* l
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% J4 @4 V$ e: k/ z' y0 m4 s9 a
today.
, \# A3 z0 W: |0 n9 t. g- ^ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in+ e" U) {2 w9 ^+ i' t
emerging markets have no problem with funding. |
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