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发表于 2011-9-17 13:16
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Current situation
" Q: N8 x) l- B" C& g$ F; e The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ J ~" @) Z' I0 L/ e) c) I- gas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
4 a& z# V$ ]. v+ I; ]/ }' D5 l* [impose liquidation values.1 y- w/ C! H% L% V2 ^/ u3 u. _: u
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
& w ^: S' ?- c8 SAugust, we said a credit shutdown was unlikely – we continue to hold that view.
! Z3 L( ~# g8 T5 y" i: w/ |: L4 ]! b! F7 E The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension% M9 W" G2 ?- Z5 B* H1 w6 n
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
4 h! b1 M# u: `2 o
% F! ^6 ?5 v2 o' mA look at credit markets
" n+ K5 e& F$ l- { Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in. h5 b: l( i$ [
September. Non-financial investment grade is the new safe haven.. x, V. A# ^. I0 Q( C' C7 t
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
4 @9 t; o, [0 f" L1 }$ W) c/ jthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $13 K& f3 Y% U( u
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
+ b" P4 Y& \- X9 X1 ^' ~$ u Aaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
* |! ~5 D' L" q# ECCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are3 D" A E+ d& E7 R/ S* V7 g$ E
positive for the year-do-date, including high yield.
Y5 e" `% K+ \& ^7 u* H+ w# |- d Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
7 N$ t; c) B1 e8 e9 ~- @# t0 }7 I% ]finding financing.
$ t8 X" e3 f. z+ s Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& r4 K; n! s6 P2 P5 Z) ~/ Ywere subsequently repriced and placed. In the fall, there will be more deals.* v, K3 g" A+ T$ Q& X2 x0 |5 m
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
0 k& S8 E8 b! C0 jis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ X6 Z; x+ w d! ^9 Xgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ S4 ^* @+ S2 Fbankruptcy, they already have debt financing in place.
" B" i% r( N+ t European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
4 C) w* y$ h. B) |/ p+ Btoday.
7 [' }2 @( ]/ l Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
0 M* _5 A* r8 e2 {emerging markets have no problem with funding. |
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