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发表于 2011-9-17 13:16
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Current situation
% O4 ^9 U9 B; j+ | The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
" R' u% @( }, K( d) Cas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may9 D: R; j0 ^- O4 R
impose liquidation values.1 a& C7 y* F( Q7 P5 B& @
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In* Y& u m# \, X; ~% A1 O4 R9 u8 p, @
August, we said a credit shutdown was unlikely – we continue to hold that view.
5 w* s# K* `; A. M- K+ _ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ \, R2 K4 z7 Qscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( t- H1 x1 o* \& Y9 S. F$ l5 w
$ S6 l) H: i& {+ I& }1 uA look at credit markets
* q; `3 |2 ^1 d7 l, _1 X) V1 K( x Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in( w3 N ]. \8 F' r
September. Non-financial investment grade is the new safe haven.
6 ~3 b0 A5 s9 _: c3 P& C High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! E' ?, \" H+ Y& o, |3 i" ~
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
# `! t: c; Y0 ~0 W% }billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have3 `8 q0 y# G E, v4 w' b, ~
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
* O/ |2 s9 I9 x9 |5 t5 C- YCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are+ I9 F& `# l; ]1 ~
positive for the year-do-date, including high yield.
$ O" [! H8 u' @) o! v Mortgages – There is no funding for new construction, but existing quality properties are having no trouble! M. m# \2 S4 x: q) i7 I
finding financing.- G+ W- `2 a0 ?/ z" y7 R7 g- j
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
8 Z. O, {+ z4 F7 M8 a, ywere subsequently repriced and placed. In the fall, there will be more deals.8 R/ }4 q1 w* p2 w
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and% A/ `2 k1 @0 H% ^: O
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
* C' s% D! g! h# kgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( s" D+ }2 |& e- A8 Fbankruptcy, they already have debt financing in place.; t- ~' C$ l; l+ N
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
; B6 A v, e4 d( ^today.7 c! {* h1 ]& N q# o
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in8 m+ L4 G1 R6 ~9 F7 ^! F+ p8 M
emerging markets have no problem with funding. |
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