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发表于 2011-9-17 13:16
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Current situation
$ W, R& E! a! z. y/ m The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long+ V7 E+ z5 w8 r1 L. C* C
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
) x U1 Z& G2 j' U& `& e, k1 jimpose liquidation values.
8 ^, g) u% v4 s1 G6 r9 d4 K In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In) m7 u, r) \0 _- I B
August, we said a credit shutdown was unlikely – we continue to hold that view.
5 D, I; Z! |. \3 u O% u' P# d The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. }$ ^3 [& D9 ~' }! P+ L3 c
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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7 t/ ?. i& a! w& v. QA look at credit markets
& U$ I1 `+ y( Q; u. h/ O Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 w t8 o# r- R* T% k
September. Non-financial investment grade is the new safe haven.
p) H n/ X2 }+ F High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%+ J& l7 }6 h& y
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: V @0 D* h% O3 q- ]% `
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have/ V- G7 z3 O& t# f9 ~( Z$ U
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) q' v, g% d3 S; j: j- N" I
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
. Q5 B8 z: K/ Z8 k" w, d Zpositive for the year-do-date, including high yield.
- H0 [. d9 v3 Z) K1 | Mortgages – There is no funding for new construction, but existing quality properties are having no trouble9 Q5 O- F' ^' {# f8 h% ^
finding financing.3 B/ I# U8 A3 V
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they. E4 y0 d. Z4 ^, p! x" A
were subsequently repriced and placed. In the fall, there will be more deals.
; T7 E6 G; p& b* w6 i0 R; m Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 e. u2 Y4 G4 d: Z% { z. Kis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
/ N r5 O, k2 bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
# e/ d+ s( D- [# [0 \0 Q! S* hbankruptcy, they already have debt financing in place.
1 p2 P; I4 G# y0 _1 n9 y% k European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain- V2 _, ^* v- w4 v3 l
today.
7 U- m9 c r. t" G) J- p n Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in9 m5 u6 A$ E& G _; `
emerging markets have no problem with funding. |
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