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发表于 2011-9-17 13:16
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Current situation
" L, K1 Z4 w/ q" t& L3 ^* a Q The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- \6 a! C0 Q9 x) u
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may% I' W, X% l: e2 |9 g: f7 b
impose liquidation values.
3 I8 R( i! k' Y! }. @7 S In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
( E2 ~: D7 b' H) b+ hAugust, we said a credit shutdown was unlikely – we continue to hold that view.
/ p! g- B1 u1 c: Q+ N" M2 p- T+ ] The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
; M G. R$ k' K# Lscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
& {1 o4 y+ x$ W" X( R6 @* `! N; H) k6 t! i" Z; {3 P' R
A look at credit markets
; j- @7 c- s1 L$ O& D Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% l$ j( E' K2 Z
September. Non-financial investment grade is the new safe haven.( d1 ?8 F m- ]* g: C% q8 Y
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
3 Z: u8 |- g" E R; Wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1, t0 y+ C$ V F8 @
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 ^# \% p3 X0 h
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
! A/ s. Z. r6 `4 |5 `" UCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
7 P$ f: e; C3 j: f! |2 E8 _! mpositive for the year-do-date, including high yield.& @7 E% E4 p% Y, x* p
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: d- |! M# Y# J$ s' _- xfinding financing.
3 y7 A. }. W( C$ u* b7 E2 i5 q Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
; L% h/ z2 Y' K: ]2 k; \were subsequently repriced and placed. In the fall, there will be more deals.
5 q7 ^: `0 Y$ F% } Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! c1 W0 Q1 u! i3 L
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were2 Z' `0 e2 ?$ m8 V7 k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for* Y0 H1 u2 C! f0 I# I' u( K8 T$ L
bankruptcy, they already have debt financing in place.
{ f2 a- A2 S: l+ J European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
% b/ q: G, k6 B1 N) W1 U) P, f. K S" Stoday.1 N* {8 F l+ J. w7 T- b3 d' D& Z; N
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in4 b* [0 o `3 `& z; G
emerging markets have no problem with funding. |
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