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发表于 2011-9-17 13:16
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Current situation. f0 @/ b5 n* p! V& `5 r
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ v+ J" e- }( Q9 Y( L: i
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 w U) L I: L1 \) Q0 J9 i- d8 M
impose liquidation values.2 t6 }" J1 _, n: j! V9 B. U5 L* V- w+ J
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In Q" A! r/ x- h/ l- H5 m" {
August, we said a credit shutdown was unlikely – we continue to hold that view.4 v4 B3 m1 t) B( x5 a6 d
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension3 r2 J8 O) N8 G+ y$ s
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.9 l# V: c- H, y# g# _
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A look at credit markets" t" {; c- X5 a) F1 h* H' Y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in& G! p2 D* B: @- m+ B
September. Non-financial investment grade is the new safe haven.
% ]3 Q. V' A+ b* v# t, v5 o u High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%" K, h9 M' Y3 ~/ y9 `
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1) x& O' v/ \/ T* s3 r4 t' u0 L
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, h* V' ~+ I3 j- O3 y8 Saccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 _8 v9 O- C4 tCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are& B9 S1 p1 e# ]# m; p& D
positive for the year-do-date, including high yield.
4 @+ z' b0 ~! u/ j( K) H* M Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
2 A, @* n" w0 S3 J0 \' t5 Gfinding financing.
# m8 E' a% J+ Y/ Q" L Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
0 Y a: a9 \1 ]7 Qwere subsequently repriced and placed. In the fall, there will be more deals.9 X% d7 x9 E0 a$ ?- J
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
+ i8 F i* }) s! }is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
+ Q$ P' C' S- N& @* {going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
, ^- L9 _/ }7 ?9 a. \& ~, p7 R8 Obankruptcy, they already have debt financing in place.
- V0 f, Y& [9 U r: R3 @- i8 l European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain4 A& D2 o9 U. o+ @( X, S z9 q, J- a
today.! \( M, `) y5 Q+ h1 F' x8 s
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in& c! o/ X+ M- N6 i! h" [4 }. @" u9 B0 g
emerging markets have no problem with funding. |
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