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发表于 2011-9-17 13:16
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Current situation
" I, d# a3 s/ X The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
! G, [, P% @# V: n7 j: N( kas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
* }" V& D' i" W# t8 @" rimpose liquidation values.
; ~* f' R" d" L( _! W* o* K In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
- M3 `( E8 G8 }3 k D* @9 dAugust, we said a credit shutdown was unlikely – we continue to hold that view.
3 M+ B9 b9 ~9 N% ~5 R+ X The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 j |6 w" F, ]% Q
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.% e# v3 Z3 \( E% |1 j
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A look at credit markets. e' p0 L0 L; ~9 d
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in" {2 x+ d+ o" M# f
September. Non-financial investment grade is the new safe haven.
, ~# Z4 \3 c7 l1 g$ V High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%% Z' y2 l! U7 C O
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
- y: i3 G$ A9 `% Tbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have) ]% `3 ~! s( U
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade4 E1 ~% L6 s) ~) P, x, N
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are/ [' K. H k2 l
positive for the year-do-date, including high yield.
+ f7 S& f( x4 |. H- R Mortgages – There is no funding for new construction, but existing quality properties are having no trouble* M$ n o* b: [' u! l3 t$ D. M& b
finding financing.' y: T2 Z( F1 \
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 _, W) e B6 L5 f
were subsequently repriced and placed. In the fall, there will be more deals.
* {, I5 h7 r$ j Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 @8 T& e2 [' ]+ G! S' _) {3 S
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 f6 e6 y. L% m, ?% ]2 I F% E
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
: G( F9 r9 F$ d/ z( [bankruptcy, they already have debt financing in place.
6 w% b! Y2 [5 U- \ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
) g8 z3 R+ \" [+ `. \today. R8 L# K" E) y- Y& H4 e
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
; f" I" C2 c( D7 M) |* z+ Eemerging markets have no problem with funding. |
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