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发表于 2011-9-17 13:16
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Current situation
5 ]9 C( @* Q$ R& K The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long. H* U3 b( r* J* E( N. j
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 h6 R7 }1 N& l" A' s5 z- C$ Qimpose liquidation values.
, x1 @: _7 }+ Z In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In: w8 Q1 T6 C8 g3 j* b
August, we said a credit shutdown was unlikely – we continue to hold that view.) E7 Z1 X' m; v$ _7 W: t v
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
5 T4 _0 |6 c6 q# qscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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$ d- `1 v& F# o9 Q u. cA look at credit markets
4 e- O0 X$ R/ m; L7 X5 s, ~ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- X/ C$ {3 l9 U% C$ L. E: Q
September. Non-financial investment grade is the new safe haven.5 L: V5 m" v7 j7 N) z
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
% X( ?5 L( g, {; q# }# l$ t) `then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
4 _9 L7 _" ]" b7 ^, E8 Pbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 m2 e$ Q, v* G |/ }$ s, Iaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade, }. b% k; G2 a) h
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
' H' [# W S. F* a; V+ Wpositive for the year-do-date, including high yield.
. ?& |: P" b# c8 y* Q Mortgages – There is no funding for new construction, but existing quality properties are having no trouble0 S0 L: \/ M3 L" M/ L
finding financing.
% q* P4 d9 B0 z2 @2 O* ], w Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
2 b: Q0 V7 I% y9 R' D1 o. r% {were subsequently repriced and placed. In the fall, there will be more deals.
: k, p9 \) C* J2 j, B& @( x Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
% p- i1 Z( x q0 `& lis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
6 Q8 [& G# J- tgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' Y. T) s# Q) L% {
bankruptcy, they already have debt financing in place.5 B" G" W# E6 i' J3 y9 T" P6 Y) j& `1 _
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain1 T$ e& N) j& k; F- I! D
today.
) c8 j7 d6 |7 d; c; r6 X: u- y Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in* o% }7 t: R( B+ Q8 V$ h) y" d. `
emerging markets have no problem with funding. |
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