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发表于 2011-9-17 13:16
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Current situation
( N2 b1 Z: k) f1 R/ @8 o J4 r The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ }, s( [/ y$ d' b3 x* K' }as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
& L: h H( Q1 ]% L' Wimpose liquidation values.. i8 s ^9 O: o
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
- M* T( [7 r8 q, a( Y% f3 hAugust, we said a credit shutdown was unlikely – we continue to hold that view.
4 e9 H9 ~3 }; @( v- s. B/ R2 p# d The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; y" Z, [: R- Y; P, p3 [5 \
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: ?) d K9 O$ R
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A look at credit markets
: f9 `+ l% t; s( O+ d$ X* p C3 P6 q Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
! ?, d2 |4 Q i4 t# d5 t, R$ o4 `September. Non-financial investment grade is the new safe haven.5 b0 }% J1 X/ g7 [* x7 o8 P( a3 k+ h
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 H5 V6 y i4 ?
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1( Y5 V: a6 h, M
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
. _3 D% F. A; I2 Paccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) Z6 D& q$ `+ l
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
4 R) x3 o4 M Z: x+ w7 [positive for the year-do-date, including high yield.- z, ~6 n! o. I& X+ j
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble- o" C' `/ _! i) Y
finding financing.
& g, W" h. l5 K; w9 F5 v( C Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
' T& c0 C( f& Z( Q, y bwere subsequently repriced and placed. In the fall, there will be more deals.
( k0 g6 r4 X$ f: x# j( b G: v7 d Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
0 D3 l" `; l# a: v! t z/ Kis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were1 [# V( v: ?: l8 w2 V, ^
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for$ Y) |9 D: ]) V! y- Z: u
bankruptcy, they already have debt financing in place.
6 m- ^ `1 V; j8 \# N% [ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain* z" c/ `5 r/ i- c3 j
today.4 i' c3 H+ J5 E; Q; T6 G- C5 u* ]
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in' O4 J2 d0 o) V1 M. V8 r& O* C
emerging markets have no problem with funding. |
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