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发表于 2011-9-17 13:16
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Current situation
2 d9 K' k( {9 X8 r3 m7 V The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long* D7 D. c0 }( o4 y, V2 Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
* E$ R6 {7 [) E' Rimpose liquidation values./ I$ p+ F+ `0 O4 J: Q; p
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In5 q1 E5 _6 W9 q( n1 N6 g
August, we said a credit shutdown was unlikely – we continue to hold that view.
7 q4 G' X* q, I The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension% H" U7 L( E! z* d+ p/ U
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.1 ]' l# |; s. F# j( K
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A look at credit markets4 e, P6 H, i& [: Q5 L
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in, r1 i5 D( y, j- C8 f# I
September. Non-financial investment grade is the new safe haven.
( J- ^$ _9 b. s5 t# Y High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
% q, B0 w- k8 k! ythen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 D9 t6 l# ]5 J$ q# w" R( Ebillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( K- F5 H/ D, k1 R' p
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade; A1 Y4 z) d6 s+ u
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 M/ V( R. Z$ R1 }# U6 ]+ Q
positive for the year-do-date, including high yield.
! e O: m; l, u- Z Mortgages – There is no funding for new construction, but existing quality properties are having no trouble% Z( }1 Q7 k4 w( G' {/ _
finding financing.
" X- I5 u9 J2 f: C# A) F# X Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
4 @0 t4 X& {. ], s0 ~3 ~were subsequently repriced and placed. In the fall, there will be more deals.
- j3 \4 \+ S9 D: z$ y, W Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
5 {3 l6 W) b- @" w# J( uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) Q' k7 V. H: n, M' Y: ~going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 w0 E# Z& |# b* v. r1 C. B
bankruptcy, they already have debt financing in place.: t$ @( }) c4 O4 b
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
; ]# f( y6 |5 b& A$ @, J1 ftoday.
' W8 @, a% y$ |! y3 g" F Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in4 N6 Z! x% |5 f. o
emerging markets have no problem with funding. |
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