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发表于 2011-9-17 13:16
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Current situation
) O0 A: i! _( Z0 { The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& D7 Y9 U3 c% S+ X1 }. yas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may+ F$ c2 Q- o8 ^6 k! z1 t7 t6 ?1 H" l
impose liquidation values.
# i$ `$ V ~' Z* f8 A0 Q) ~* I In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) }- Y3 N$ P0 | c' G% xAugust, we said a credit shutdown was unlikely – we continue to hold that view.
9 n2 L/ Q; `# Q' C! ~) [# F# D The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 P7 B4 S& b! \1 \5 X
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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5 x( ?& S, |5 F, d* _A look at credit markets
( T ]* L$ Z* p" q Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in! \& u! }* f# M7 ?, y0 P
September. Non-financial investment grade is the new safe haven.( r5 [* y+ |' q! Y
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
& S4 a& `4 i p4 X- xthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
/ S3 j( ~$ l" B$ V& k3 b& ]billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
! ?. m9 i4 V' Z9 i/ p, _access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
2 z/ c. F* w5 ^! `CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
, W2 Y, |9 }. {; Z9 r3 Lpositive for the year-do-date, including high yield.+ @ o, O- L O( Z2 n
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
) l0 }: g3 m e8 H1 w0 Mfinding financing.
0 {; `' _) ~# h7 ] Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
3 D( T/ t/ l3 z# xwere subsequently repriced and placed. In the fall, there will be more deals.8 f+ p% [+ k! |
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and5 W+ y7 G$ U# d% Z2 v) a9 p
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( _1 H' O5 \8 k: i5 F" T- k) U: O
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 U' Z% G+ c: W# Q! @( H
bankruptcy, they already have debt financing in place.
, _5 K2 K6 l% x" r European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain" g" r5 {5 c% G0 K6 L
today.$ v6 G. P/ d, |% K8 D0 c
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
: l$ K8 V$ w) ^9 jemerging markets have no problem with funding. |
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