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发表于 2011-9-17 13:16
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Current situation
! b0 d* v, o% I# m. h0 Y The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long9 }% Y- A9 a" X) q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
+ W+ N: Y$ G+ i' t4 |! wimpose liquidation values.1 F! y1 n! m% ]6 a2 ^( t, h
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In& m5 x3 C0 m3 {/ S2 p2 o* F5 E6 H+ q
August, we said a credit shutdown was unlikely – we continue to hold that view.- T. u% q! ^3 \+ w
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 ?* k' h' N1 B1 W9 X
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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& D" B, K, z: d- L* q0 ZA look at credit markets
9 G/ ]7 J% k" x& j6 m6 j9 f1 n* ^ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in6 C: ~9 f4 `, p
September. Non-financial investment grade is the new safe haven.
# w& V E1 c) w) n* B \$ ~ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
+ b" M( y- I8 Z, p& Cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
2 }/ U' W! S- q& t7 Sbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
$ g( Y( x1 x$ E5 O- _: W9 Z3 eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
5 l; r1 h8 r4 O+ r1 NCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are+ p/ s% J: Q$ M; ^8 z6 O* ?
positive for the year-do-date, including high yield.
. c5 Q! O; ]& I$ v0 V% H Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: |2 R4 t% }- H& v" b* z( c. Afinding financing.
# X# t) r$ z9 {' I( c. p Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they, T: Q; k$ i. J. x
were subsequently repriced and placed. In the fall, there will be more deals.6 S$ i! [% g7 O, t1 L0 o
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& S( K) r: N t8 w6 _is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were1 h5 b9 I" |- T- x) j: g( a) a
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 m6 D/ B- s: B
bankruptcy, they already have debt financing in place.
' y: S* s0 v- R! B6 N8 x9 w4 D European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
3 Y0 W3 T# R% L- U2 m* Atoday.1 p# V% t/ U0 \/ G# C
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in4 |# y. i. M. k: d
emerging markets have no problem with funding. |
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