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发表于 2011-9-17 13:16
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Current situation
& P' E9 S3 v0 w% C9 k The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- B$ D! m6 ~/ [% [; P
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
2 h2 w, a: j4 q% Z' {impose liquidation values.
& ^- l# `0 i+ W In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) y0 J5 s! c7 k7 }August, we said a credit shutdown was unlikely – we continue to hold that view." ?! x/ n8 Z# r
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension+ ~1 w; }% i% V( K4 P8 H
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets' {3 Q, X" l5 L8 T% g
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: U/ J: ~# ]8 c# m/ ASeptember. Non-financial investment grade is the new safe haven.* P4 }) U: W2 O4 l
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
1 `$ c( c" L( r6 Uthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
) P- z8 `( j& x7 l2 V9 ]billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
+ J) x8 S; A/ C! k5 }; ?2 \# vaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
* \/ _& ?6 f* H- F w& YCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are$ I- X6 G7 D6 M0 t
positive for the year-do-date, including high yield.% ?0 a% l, r( m% g
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble2 |4 b: b7 K( N0 L1 T3 j
finding financing.2 A5 B' g9 L e& S4 G& Z
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they+ O: X8 l. c; n- J. r H
were subsequently repriced and placed. In the fall, there will be more deals., X9 n7 e' C C# V: @
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 p5 I+ V7 p& L; v8 I! ]0 ~: M
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were/ n2 m2 g- ?7 ]: ` M9 S
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
q2 J3 Z% d1 M' H9 F8 V2 t) ybankruptcy, they already have debt financing in place., P3 K4 A5 @, h
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
1 [6 d+ L- c [today.
9 S6 t# h F2 W Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in3 G7 C, D3 G. z) M! p
emerging markets have no problem with funding. |
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