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发表于 2011-9-17 13:16
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Current situation
1 ~+ ]5 w9 b9 C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long6 k) Z2 f! H4 x
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* w! z+ k3 }8 J' w. {
impose liquidation values.
, B' M# G* b' V1 W5 j7 F In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In, x+ C1 G7 p; M8 Z3 J) N' q
August, we said a credit shutdown was unlikely – we continue to hold that view.$ L9 i% f! v. e; E; v6 C. h
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 B6 k- V6 y) |7 K. A; S
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets3 T2 I* b$ ~6 b* |
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
U+ D# O- ?# C Z* c5 x; T( }/ RSeptember. Non-financial investment grade is the new safe haven.0 F0 E/ ^* {9 s+ p9 O/ R
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
( W! t3 W- G! A; K Hthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1+ V% X1 e& p7 j) l/ Y
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have# U- w' i7 {# J3 c: z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ x" y' k; x$ b. \, I$ ^& _
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are0 q* w# l: f. X1 p! f
positive for the year-do-date, including high yield.
& a) d, H6 z% r, X Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
" K7 |1 K7 |# P/ D9 V+ ~finding financing.& r5 M# M' y: D9 C' e
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they r4 \% C) [1 U/ b; @( c3 k# ~3 R/ J
were subsequently repriced and placed. In the fall, there will be more deals.4 s0 I4 M! E6 T: l" a$ ~8 ]
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
) [) @9 }1 P5 \is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were6 k Y3 q2 r/ S8 Y* T4 c# c1 w
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
# z' w0 M, L( q \: I/ Ebankruptcy, they already have debt financing in place.
( I4 Q0 h( x8 e, C( D9 }- J2 I: X European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain! R/ [# m% t0 m9 Y k
today.
y: V1 H0 _# Q/ q* U0 f Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in3 r7 ~8 {$ h0 H" W0 G7 E
emerging markets have no problem with funding. |
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