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发表于 2011-9-17 13:16
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Current situation
) }$ d: ~1 S$ q9 T6 L4 z+ g5 V5 V: h The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- B* i) z' k0 I/ G' J. Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may1 E5 a2 t4 j* B( O% p/ ]
impose liquidation values. D4 ^( R& i# w1 }5 }, X
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In; A; m+ l% i6 N) n/ f S8 ?0 `$ q
August, we said a credit shutdown was unlikely – we continue to hold that view.
% Y, s/ J$ d9 C: H4 O The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 C% C1 w5 y" M& j$ w% Xscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.8 c8 ~" M& w9 ~* h" J, g4 X6 X
& w8 b$ \ {4 e9 e8 w( kA look at credit markets" ~; N- I" R. w/ `5 c
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
2 I) w1 o9 \) B0 S- F3 h) ySeptember. Non-financial investment grade is the new safe haven.8 U' y2 l1 m+ y9 ~: l2 @( O( }
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%+ G( T( \: T2 F) z4 U6 F1 J/ _9 K, R
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. v7 [; j6 c; n6 z% ~4 u8 T
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have/ n3 t8 \$ J& [* s/ k0 U3 d% D7 C
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
, W/ @0 U/ W! `5 G1 ^' L0 e% @3 p1 VCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 ^6 m, y# d( V0 e) P
positive for the year-do-date, including high yield.
& E( Y$ {9 \( z; E- F$ K Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; _9 x' s& N, ]( s) [" }& }
finding financing.
) J" o3 T! P: L; Q3 B5 C. o. ^ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they! `$ g: P4 q# U; j
were subsequently repriced and placed. In the fall, there will be more deals.
6 m/ e! V, f" d: _" Q/ ~ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* D2 q9 G0 h/ s% K% U) i) r6 h) M
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were/ A C! J' K2 K7 L
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
& ]) P5 Q Y* j1 Q# I; W3 Ebankruptcy, they already have debt financing in place.
! h8 \4 h( O4 F1 y$ ~ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
# e$ z; i; R6 H. ], Y( s8 Wtoday.( m! X0 T4 |9 @) K, Q/ k
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
; B4 s6 U# w2 A# @& B, t5 v5 y6 Temerging markets have no problem with funding. |
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