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发表于 2011-9-17 13:16
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Current situation1 E% L# K) @, }3 s# k5 x" V
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long5 K! m% L, Y3 M% L: G
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may0 } a# s* l, `2 g' G
impose liquidation values.5 F$ @5 ` u, F u( q/ f: S
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In( z$ H5 Q+ I) f3 l1 M; w* J
August, we said a credit shutdown was unlikely – we continue to hold that view.
# I" _4 N; M- E& ]1 w The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension4 u" A0 Z# Q6 Z r. Q: w1 y
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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& ?/ Q* y5 O8 g! {7 V+ DA look at credit markets
" \# X! ^5 `; T" O* ]- Z3 V* E Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
1 `7 [# ~9 i Y$ V" J. WSeptember. Non-financial investment grade is the new safe haven.
( _4 s7 H" G3 s High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%. ^9 n7 E% ]3 S
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $18 f `: n' b4 H, u& x1 Z
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
" K! G5 m, K. `9 h. t: J$ qaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
4 D" y3 q/ k6 T7 i3 nCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are5 r6 p0 y9 g" z0 q
positive for the year-do-date, including high yield.7 _9 d4 ^- P$ E+ d6 o/ z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; |! ^. `0 M" D$ T3 t
finding financing. I& t5 F4 ^, k q2 I
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they+ H( s# {; \! U4 g- l- I
were subsequently repriced and placed. In the fall, there will be more deals.4 M6 n5 d b9 j6 j& ~
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
6 K+ k% M, H% a4 g6 y& ais now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
K! a& v5 m9 Z& A- Kgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for- G! T$ t0 [0 B4 F4 s2 T
bankruptcy, they already have debt financing in place. \3 O" P7 t- g. Q5 p
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
e( Z. O% z _9 R. v+ P% x. |today.
- r0 L" F% a3 z' R& E Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
* g$ t, f2 J9 I x; b. Y) s. a# Memerging markets have no problem with funding. |
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