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发表于 2011-9-17 13:16
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Current situation, U% `3 M3 {/ R7 T! S }: V" P
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
2 k8 f4 I/ f/ P) \as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may3 T3 r& @. J, G
impose liquidation values.% }: E. V3 A: n! l/ W3 @3 l
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
1 a2 c5 u2 ^0 x2 M7 DAugust, we said a credit shutdown was unlikely – we continue to hold that view.
/ \* `9 E8 I; W; z* ^! X$ O The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension5 q% Q4 P- o6 Y0 i, t7 |
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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& s% Z% x4 z: s3 B7 R% nA look at credit markets+ N8 K+ D- B& k' G: a
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- j. j3 {+ {8 P% k" \. s/ X
September. Non-financial investment grade is the new safe haven.
3 p f3 I: L# G High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%- N- k) R1 S/ u6 ?% d
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
o, p1 Z5 J! gbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- M$ M' [# Y3 |/ Q" E9 q
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) O1 U% j) S0 c: S9 c& Z
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are4 R& x% Y1 y9 }' D! X8 [
positive for the year-do-date, including high yield.
* Z1 L- d" g7 z; ~; d9 } Mortgages – There is no funding for new construction, but existing quality properties are having no trouble* p. ^# U" v% h6 H1 T
finding financing.6 j9 z8 ]% u/ o% ~# \8 X
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they, g4 C2 t. x: n/ D
were subsequently repriced and placed. In the fall, there will be more deals.; F* e5 P. N7 A2 P: H
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& c2 R! ]' E; b2 t+ mis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 ~% n6 x' A5 H+ C$ {going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" `7 W/ x! c: ]7 a1 B2 Q
bankruptcy, they already have debt financing in place.
; t" F* W: J! w+ F European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ Z& G' q' w9 c6 i* o
today.
3 H- j) ~5 B& w4 x- F Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: h& @( y0 J7 T% y( x) C
emerging markets have no problem with funding. |
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