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发表于 2011-9-17 13:16
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Current situation
O* g3 _, [- Y/ @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 w# q8 m9 H2 Pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
6 g& I: E8 W* Dimpose liquidation values.
8 S; U" G2 |; L5 I m/ v- ~) y4 V In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
' j0 A2 v$ A3 b1 C; @& S) BAugust, we said a credit shutdown was unlikely – we continue to hold that view.
& F; I0 [; R- }7 e2 S7 H% M1 z5 p! R, b The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
! Z5 o2 M" a& w- h0 }0 Sscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.7 w* x2 G- {6 | _
: {1 q# ]# _/ x% H8 G$ e- {A look at credit markets
6 f$ ^7 U% @, S0 b( Y! p Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
8 z* ~; v3 u9 ^# iSeptember. Non-financial investment grade is the new safe haven.& x) E) w# ]/ L, B) p% S' [% e+ R
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
. G) T# g2 Q) O9 _" t( i8 ~% tthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $10 i3 K8 Z0 T& Y# b' U: f
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have$ e' W4 }5 u5 _9 Q
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade/ v! \+ h& M/ V- O: B
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
' j& v+ a9 z# J/ R8 G" w3 ]" \positive for the year-do-date, including high yield.
( j0 k. z7 Q1 ]9 H5 h4 P Mortgages – There is no funding for new construction, but existing quality properties are having no trouble8 t7 l# a$ B! s4 j* D
finding financing.
8 p% t9 @8 B% l4 `2 L5 {/ c Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 b& o! l( \& _* K6 Z6 A3 b1 @* ~. m
were subsequently repriced and placed. In the fall, there will be more deals.
( v, ?$ | Q- y, V3 Y Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
9 n7 X7 L; K& I& ?is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were* I2 [+ R1 Y$ d( `5 f7 |
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ U- Y3 F& c# o0 u' [& ubankruptcy, they already have debt financing in place.5 N+ j9 W& r1 H! _6 s2 P f8 ^
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
5 u) P- T+ T6 p8 [today.
& c! o' v& w/ T. Y( w( Q- C/ F: a2 A Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
. O( l, g" z: e, R9 aemerging markets have no problem with funding. |
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