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发表于 2011-9-17 13:16
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Current situation
& z/ ]8 r+ z5 N The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: c `) C2 A' C8 A" x
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& z3 M3 C' i* m( W0 N% x% d
impose liquidation values.
) f( L; S7 l( \) r8 m In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 D5 C5 d3 W& R) xAugust, we said a credit shutdown was unlikely – we continue to hold that view.
$ \7 R R9 }( ]- u The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* b: `4 O Z2 y/ ?
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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( P' I* ]. `; k; p$ z% @A look at credit markets
8 {$ D# S% L+ y- V) R2 o p5 u Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
" q: `0 @" i5 L8 C4 f5 K l/ J" ^September. Non-financial investment grade is the new safe haven.
# d$ ~1 t/ {6 U High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%( F& D" g8 R; o$ d0 N
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
5 \3 N6 l$ {- Z+ A, B" C/ M/ Zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
$ O* `5 m% U& G3 M2 N8 Q+ Oaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade/ i6 C3 E0 h, W
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are& u' A4 W2 R. O: g( t
positive for the year-do-date, including high yield.: X- R- ^1 G! r8 x2 I/ w
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
5 y3 ], ]; O: ]& U, I& B% O5 h, Efinding financing.
$ i# b' I/ G7 s: D+ u: }$ r, G. J Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they, v4 x7 U( ~9 a7 _: F
were subsequently repriced and placed. In the fall, there will be more deals.' l O" A" h* Y+ G% w& N* B/ x1 i
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
9 H6 m' S. U7 B* B2 x( o9 [is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were, f7 y" O+ z5 c, |- N6 F6 V. [) j
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ _2 k2 t/ Z5 ]! f3 i% P& M+ @bankruptcy, they already have debt financing in place.
" ?! s( _& O9 G' W9 c European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain- i* g: ~9 L+ Q+ t6 M+ Q' a+ S, B
today.3 l7 | `4 U2 }+ ~( Z* B1 I
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 Q8 y, y/ Z5 \4 W" [* ?emerging markets have no problem with funding. |
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