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发表于 2011-9-17 13:16
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Current situation
8 O* n. L" u6 p. z* Q* J2 R1 E The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 X( Q* ]( A9 C+ Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may9 |1 f8 P1 E- R; P: l! K) i
impose liquidation values.
, U+ [" P. R8 P In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* L0 ?& Z- h7 d6 f3 j1 }' W2 lAugust, we said a credit shutdown was unlikely – we continue to hold that view.
3 A! w* ~- \3 x2 s' V The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 J/ t. R3 T& E- Dscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
- @6 b& J) O9 s/ Z0 } N' t2 Z( d$ s, p" D- P3 U5 n
A look at credit markets9 ~4 k4 F8 A# Y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 R1 @" p+ z' f0 l& E/ u. P
September. Non-financial investment grade is the new safe haven.6 ?, }1 o; }; X; F: @9 |. z1 y! G
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%2 Z: t0 y! Y0 ~8 L' p9 u: }
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1; G! M6 A# @* E! s7 B9 U
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 J/ J) [% [/ q9 L
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# n1 K- `. H4 I1 }
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* o9 J R- z% z; a
positive for the year-do-date, including high yield.% P& J9 o6 V. T4 t4 b3 c
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
# X+ A9 s" e/ n; |" ~2 O" ?6 Yfinding financing.( I# c9 T1 U: k
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
" k' |8 w% J3 ` K9 ~! e2 w% wwere subsequently repriced and placed. In the fall, there will be more deals.' L4 u, c, Q, b5 r4 g
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
! X' c$ k* X; B6 gis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. } p& F) o9 t: w) l5 egoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& Q S3 M7 `* B/ W# }
bankruptcy, they already have debt financing in place.+ X/ T, v0 b) h3 E' l1 P
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain1 C2 t, T: _4 a0 L1 I
today.% W: C: S. j% u6 V
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
q; w0 s: b g f- C" zemerging markets have no problem with funding. |
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