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发表于 2011-9-17 13:16
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Current situation
. }3 _/ z1 e v6 {3 R The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, Z. W y) t, j
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, \/ U& O4 W, J" c* B3 A% mimpose liquidation values.
. w' y; v& {, `6 i1 I In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In3 P+ [% K8 b- U& p6 a" s$ S! Q* D
August, we said a credit shutdown was unlikely – we continue to hold that view.
* |9 {: v& n/ `5 x. g( C/ l The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
$ Q- c; G5 Y& x6 c/ Z% f+ ^( uscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.3 |0 r: Y6 {4 z% c7 V' {
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A look at credit markets
6 Q: w3 R2 M( X% W( e" S Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 C" }0 V8 K7 O* I' T" K; c2 I# b
September. Non-financial investment grade is the new safe haven.
[1 w9 i. e) w8 t High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! i, X* D) N+ R5 F0 Ethen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
& w1 W6 a' d. K( ?( w' I) a4 mbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have A5 @ u8 A4 ]8 l" [
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# g& \6 x3 P) t- Z3 k
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are4 O% l `5 G! v+ T
positive for the year-do-date, including high yield. H% @& h5 U9 f. h% e+ M+ R! v. ~
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble: A8 ?" i5 H k( D# K
finding financing.. h; _( C& H9 ~! c( `; {0 O
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% ~. G5 O! H% |( b
were subsequently repriced and placed. In the fall, there will be more deals.. L/ ]$ Z0 B4 C7 Z; R4 l# P l
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and5 q$ k2 p/ h" x8 g7 D+ l
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 @4 Q" L* c6 q; I1 ]" Z0 p5 W2 h- hgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for( x8 D# | W3 H Z. l# H ]! C
bankruptcy, they already have debt financing in place.
3 `. i$ Q, E( q1 H: l9 z' d$ y European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain. b+ b2 B* |& p- ]- Q+ {3 T5 L/ X+ R
today.
5 q/ |2 K/ @1 y! X Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 y6 w0 s' I0 ]emerging markets have no problem with funding. |
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