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发表于 2011-9-17 13:16
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Current situation
+ k- V" Z5 H. I* t The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
! w# y) H7 @! `) _: G1 j5 o& j3 aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may+ a. B* v) t$ R; Y; H5 k- I# _
impose liquidation values.
) E! m6 J/ c. K V% M- X4 z& U In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
% ]% V* t5 n5 }% m' KAugust, we said a credit shutdown was unlikely – we continue to hold that view.! b6 V/ c- W: k4 w7 w
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension q; O6 @/ X |2 Y7 T7 e/ \3 B
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.) D' b4 a0 W Q& ^+ H4 f3 z
/ H' W) o: {3 ^% \
A look at credit markets
1 x) U1 U( S9 G, Y$ N% @* l Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% W% U& t" Q) c! |: b( @9 C. i8 {% [
September. Non-financial investment grade is the new safe haven.
0 o6 l# X' H( D' D* d! D( O High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
, T2 O# B1 b0 O( k; u0 O, Uthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $13 C0 ]+ k. f, Z4 o% W- V
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have. C- D5 R7 U2 ?
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
% Q+ G2 ^- `+ S. B. nCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. J& S4 ^; E l9 V% W$ W) g
positive for the year-do-date, including high yield.
' H9 K% P+ e( W Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: g. C& ^9 ~: _+ E% ^finding financing.
, q1 k5 x, r; l' |1 k% J U Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 E$ s4 H. U. t7 }. X
were subsequently repriced and placed. In the fall, there will be more deals.+ F, N+ l5 k( W7 C& V
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and- ?* k) t4 ]9 j& S
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) A% p8 m7 _5 Q0 D3 L" ~# C# n$ ^# Ygoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for d; e# L2 n! c% }8 @' w
bankruptcy, they already have debt financing in place.! b8 f. _- l3 C5 l# ]& {
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
' g. y6 E% Z2 a! S/ y ftoday.( h' j5 m, x( D7 q, g/ s
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& l" L5 u9 X: f: @6 F! _2 Aemerging markets have no problem with funding. |
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