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发表于 2011-9-17 13:16
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Current situation
) _& A) w9 q9 f9 E" C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long* q, W; x( y3 l8 ^3 P
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 z* G) G3 Q- U% O7 w
impose liquidation values.+ _0 R: z, [; s5 |8 q+ J7 B
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
2 @% o, _4 ^5 X1 G# bAugust, we said a credit shutdown was unlikely – we continue to hold that view.
; Z4 r4 k3 @1 f( \+ Z& A& G The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; ~1 ^ J* J1 @
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.; j0 N; h% v* m8 E
& @* J- I/ D+ p1 `2 C3 [
A look at credit markets9 Q2 y3 N. q O C7 y! y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 b g5 C: i2 e i: F4 OSeptember. Non-financial investment grade is the new safe haven.
; q3 j5 m5 @) c1 |0 q8 b. u- r% b+ F High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%; ~ b) R. @0 h
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1# G+ S/ G9 V3 u, x2 D
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 D9 u/ U! d# {4 A3 C) j' N
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade1 e/ c9 o% w2 W8 z3 ^
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are$ i4 U/ y I( y; Q B, |
positive for the year-do-date, including high yield.
, f: L v# {3 z8 `5 m Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
3 d+ @- _0 d+ C' ^1 ^finding financing.
, G% W7 \% y% y. D2 h1 B Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they [* q+ U& _) b- w. i
were subsequently repriced and placed. In the fall, there will be more deals.
' f6 a2 k) d' r& ]% K) W7 J Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, f8 q( v- P3 }& r- b) Zis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
6 K! H5 k. H( r" z& Zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
0 m5 U+ |* N% R( p& gbankruptcy, they already have debt financing in place.
" l7 z( j& C" H European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
& P, y& `7 C) J, M6 ]today.- x% ?6 D b* ^' t6 s% e& O
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in! |% A3 m; C7 W( g7 K; f; B
emerging markets have no problem with funding. |
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