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发表于 2011-9-17 13:16
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Current situation
. M# w5 X7 V. |' l6 i9 V The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
( o* t1 m7 ~4 Y! h9 V& x/ q% Pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 B' f: Z Z+ c" c3 c& _impose liquidation values.
7 z% T, Z- M% `# F5 |+ {5 T In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
- y2 A1 w( l* {/ oAugust, we said a credit shutdown was unlikely – we continue to hold that view.- S4 Y5 K8 h8 k4 d6 A4 o( {
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension, z% q; T& J& T$ d& N2 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
7 L) i8 Z; J9 P8 b! Q Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
; [" x$ ~6 c0 L7 {2 J9 ySeptember. Non-financial investment grade is the new safe haven./ D L: B! m* g" W7 z6 F: S! [
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 w" i1 p) t& J# c7 q; @
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
2 H+ r* H0 l/ ~5 |1 H/ Mbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
1 L5 x) R+ S$ c; kaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
& W9 q2 T7 |5 v* K) WCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- _" ~2 Q; r% K2 Qpositive for the year-do-date, including high yield.
7 R; j; C- t" y% D' {' t: Q: I Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' h2 C2 d. m x8 S& kfinding financing.) V5 z. w4 i% x9 ~
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
- R7 j) B9 E0 R+ ?; [8 Ewere subsequently repriced and placed. In the fall, there will be more deals.3 `$ B1 V# E" U: ]+ U( l
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 i! `( y2 i6 o( `: _* }: v$ M
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were* T2 X Y5 ~( k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
. E! Y% z6 c. V! Sbankruptcy, they already have debt financing in place.
" r! o/ ?0 Q( a& u8 F2 R- H European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain& H/ g! O( D" a2 G% L1 h/ D6 g
today.
, k8 G" c1 z3 q: n% | S& i Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in* n' F S) C3 g6 J! y3 a
emerging markets have no problem with funding. |
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