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发表于 2011-9-17 13:16
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Current situation
7 X+ F7 L9 `! r7 {6 L. \ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long4 o. Y0 t0 g& T5 |
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may c; }' K( e* I
impose liquidation values.
' G7 t7 ^, F4 X; k- Y1 d( w' J In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
$ E9 h3 h" h6 OAugust, we said a credit shutdown was unlikely – we continue to hold that view.
. [" @* _5 r. ]# }4 O The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension4 `+ L; U; [4 A9 B- o! K
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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$ G/ j4 G' J1 _$ OA look at credit markets4 [% N% W) g9 `! e8 A
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in* a, D1 H' d% C$ Y
September. Non-financial investment grade is the new safe haven.3 O E+ s! ] h- B# }# j. }3 j- E
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' a/ y4 Z% U: v, }+ m
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
) j B: s4 F. c1 R( {" t% Xbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have% I6 ]! g3 @ l
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
' H: C% E5 M5 cCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are; {% Y1 d9 X+ J- _' z
positive for the year-do-date, including high yield.
; [/ e( C8 @3 h1 |& G' o9 } Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: q9 M: b0 u: c3 m4 k: H% w) Nfinding financing.. Y' E7 i) b- _7 d/ m" F! C
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they$ p' [3 {2 t5 w) S J! g2 u; R
were subsequently repriced and placed. In the fall, there will be more deals.
$ p& q" l: O4 `: A* G+ z' L& ^+ i Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
9 v; d5 p4 S- {9 ^3 V, r$ {is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. S* E; n9 z( y7 x& U& bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
1 V. x" ]1 l" a! u6 |$ m) e( [bankruptcy, they already have debt financing in place.
) Z& v) O5 G" w5 a5 k- }2 h" v European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
0 F! N$ X% v" h; H% Nemerging markets have no problem with funding. |
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