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发表于 2011-9-17 13:16
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Current situation
' y* E$ e+ h( ]" ?) h, [; r1 a9 Y The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
$ L5 [( w' o" i' kas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& D) o4 a# Z% X0 e8 K+ C
impose liquidation values.' Y: c& G! ?2 C: q+ e2 J3 {. }- p
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
4 F6 R6 i. G" y3 P; JAugust, we said a credit shutdown was unlikely – we continue to hold that view.! K ~7 [! I8 i4 O3 S
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
) Y% d; [$ q4 ?( Lscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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5 O) j8 |; D, AA look at credit markets8 U$ W& a3 U0 h+ V4 x5 }
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
$ ]3 B, u8 e; @ h4 u5 O+ pSeptember. Non-financial investment grade is the new safe haven.) [- d8 C1 l4 K% Q9 D+ r, u
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%$ X* N* S7 B4 j R3 `: \6 K
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1$ a& Y/ o( I8 p: J- `# N
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
) {2 i4 z) @( c0 faccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade; i$ ^( [! t( l' a: M, a) B
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
* {4 H, j& F# ?8 hpositive for the year-do-date, including high yield.
7 q4 L* n5 A7 g: E, ]% R: i Mortgages – There is no funding for new construction, but existing quality properties are having no trouble) \, J9 U& g# b7 W( r% J+ [! e b
finding financing.. U8 M) g& U5 K5 S& T6 Q" W, q
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 a* V( N) y+ Uwere subsequently repriced and placed. In the fall, there will be more deals.& m4 _+ f2 D" C7 q# \* c+ b
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and9 P- V/ }& r9 N, E
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
' q6 V+ n( d, D- M& o7 A! v: wgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 W( v7 w2 _2 y! q& ~. b |4 [, X
bankruptcy, they already have debt financing in place.0 ?3 M, |1 X7 F/ b5 C3 w+ j3 l
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
7 s V. r* W" _% ^today.
; ~1 a( ^- v9 B$ j Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
7 G8 ~0 v3 O7 ]2 remerging markets have no problem with funding. |
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