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发表于 2011-9-17 13:16
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Current situation1 A7 U- c0 U. x) h8 r2 A* V, i
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
. `. W/ j# {% `as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 k: P! V# l, F0 K' P
impose liquidation values.+ `0 @) B/ l/ e9 f3 g: q5 F" y# d5 A$ a5 P
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 A/ |4 e# K/ p0 r! U$ VAugust, we said a credit shutdown was unlikely – we continue to hold that view./ F1 V5 O) j& H1 ~
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
# }/ g4 @8 U- q1 Q0 B/ o" Lscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.9 H' w# n- v9 S0 ]! _ y' v
" {* B% l0 D( H0 `1 b
A look at credit markets
g- e+ V" k; z+ V Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in/ B3 ~$ H! I7 j6 j- ]8 d+ ?
September. Non-financial investment grade is the new safe haven.
O/ _% I( ?7 v$ q High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
5 G+ I1 n) e5 Z( M+ _- S9 u' athen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ L1 r* f( i0 ?& ?# n% Xbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have8 `; U# Z2 u* z3 {1 k' F3 e
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade( a3 N' Z- W6 g) O: H' j
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* f) i' O/ N% H8 S/ _: z: I5 G
positive for the year-do-date, including high yield.
}& k; Q) Q) P# p6 d7 B* F Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: z% }* K P+ E, \! _/ c% g) L" H( Yfinding financing.2 d! o" {; Z. A( ~: S
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they3 [8 ^+ y) I+ K2 K5 f8 o6 V" l! C; }
were subsequently repriced and placed. In the fall, there will be more deals.9 F6 `3 i; ^0 c) r
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and7 V f# }% R7 t/ l
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( o' J. D# I( [ R) s. F
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for* _1 s/ Z. h% D0 m/ n
bankruptcy, they already have debt financing in place.. t( a# t* E2 L, K% K9 Y+ D+ }, W
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
% w3 ^1 p. O( F+ z6 s5 ^5 Z: ltoday.
5 L& f5 `' U# v7 e6 \: o) g. L$ X5 T' V/ E Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
) m$ F4 O& ^1 q8 |emerging markets have no problem with funding. |
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