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发表于 2011-9-17 13:16
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Current situation
* I, t$ \+ m. r/ U/ C+ J# q The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& u( T5 X# r; c; ?
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
" y: w# D) g+ V9 F. K5 ^impose liquidation values.9 a* D6 y$ Z& D5 h3 X
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In/ }! X6 P% p$ a% [2 }# L# ^
August, we said a credit shutdown was unlikely – we continue to hold that view. }6 i$ T0 [' w" f( y% m3 G
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension# o# j# G) W: X( q. k
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets! t% M; a: d2 E; R# A
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- [* \& ~/ D. ]5 jSeptember. Non-financial investment grade is the new safe haven.
) ?5 y6 _; K9 l/ r5 t! P; ^& Z High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! n" a1 A3 v' ~9 b/ o6 Dthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 \, `; |8 k, g0 x& M- b( K
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have8 D' ^1 s8 {4 W$ @- r, E9 w
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
$ }5 F7 g( V: j! T/ ACCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 L; y1 Z0 B9 [positive for the year-do-date, including high yield.1 U, F) w' E! ~' ~$ V3 o
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble' c. u8 _7 T/ v, V+ E3 @' M
finding financing.+ I+ X% x8 G# r
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. e/ d0 y3 m( a5 D" C* P/ I3 hwere subsequently repriced and placed. In the fall, there will be more deals.4 z+ v, O4 Z y5 h
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and1 [2 ~3 c) l* c, }
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
' W* e8 c7 V3 E! V* ]0 ugoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for+ C+ t6 k) |3 p6 x( V
bankruptcy, they already have debt financing in place.# P2 q; y* J- }, {0 C
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 e' G5 |5 V: n% q$ i! O
today.: h& ] f8 R8 |9 I& o" |* D: D8 o8 P
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 g+ v' m' J* P! }3 remerging markets have no problem with funding. |
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