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发表于 2011-9-17 13:16
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Current situation
) }$ U- l& w" R& g. ^$ @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long1 K1 I8 T/ D* w
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
5 v1 t/ e# f# I, S# P6 t+ y/ _impose liquidation values.
1 R5 _. O% O6 W4 F1 R, }4 t In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In; o% k) f+ W5 {9 u0 O
August, we said a credit shutdown was unlikely – we continue to hold that view.
/ @! R6 w* [# Z: u3 D# ] The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ N% Y& N$ T& z7 |" c) l x9 q
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: X) l' z4 A& x% _
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A look at credit markets" D0 G' E# C d" N
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& n F+ k. C2 \' }September. Non-financial investment grade is the new safe haven.5 S( q F/ m2 z5 |: P4 Y$ _
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%7 Q2 }2 T% Q6 o! A" k4 T! k6 P
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
. N( l8 F- c- c% u3 Zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
! T0 W9 V9 b: {! v1 b% ]! A, eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
1 x+ r7 t% i$ s4 X Z& `CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are$ y7 g Y+ M& u! w7 i9 X( b
positive for the year-do-date, including high yield.
, {6 B% \1 K1 F- d/ w4 A Mortgages – There is no funding for new construction, but existing quality properties are having no trouble% t4 s' L, q3 g3 u- h
finding financing.
; c+ O9 Q* B! G Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
* T( E% I2 B" N3 X7 W: j1 X- Wwere subsequently repriced and placed. In the fall, there will be more deals.
N/ w; c/ N4 |' K8 R/ G2 C. S( R+ [' _ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
% t& Z& |/ r* [is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were4 q1 |1 x2 I( d& {3 `$ g
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for. R' ?' L+ f1 x1 `
bankruptcy, they already have debt financing in place.3 N% T# h W8 k$ O
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
- ^! h$ l. {) S1 Btoday.
% a) \# E- f1 K Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
0 e7 b' m, E4 d) o6 b7 Semerging markets have no problem with funding. |
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