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发表于 2011-9-17 13:16
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Current situation
# u7 Z: e+ ^! r The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
- ~3 b/ ~9 o7 i- m Z4 kas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
- R) R/ Q5 F: d4 z- Iimpose liquidation values.
3 u \+ K' i8 ^ d# H3 j In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
' {" B7 q5 W2 d0 \% rAugust, we said a credit shutdown was unlikely – we continue to hold that view.
+ S2 x/ W, u0 G5 l! m2 I The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
% E2 `3 q& _" \3 ~! J$ w3 x+ ?scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
( _4 T" W6 Y `/ P v5 f
# K! f1 r& f( o* F9 _4 G2 _A look at credit markets0 D( J( q* M" {& K$ A4 s- ]% f/ Q3 @
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
. I. W' w( L' P9 s1 |) C- k6 Q1 fSeptember. Non-financial investment grade is the new safe haven.' N. }5 J: n7 J) \5 o9 a/ I
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%$ ]- q: }4 D# x. N
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1; u2 n# b. L9 b- A
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' J( V7 m: @3 Haccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ |, d7 ~) h$ r! G# S6 J1 i
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 A" Y3 q" U" M* D
positive for the year-do-date, including high yield.! z% X! d% }$ `) X4 H4 w
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble- n$ X! e$ J x5 R6 C& a
finding financing.) M' f9 q! z7 f
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they* p0 Y3 d# |8 x$ u6 Q+ R! n. ~# {
were subsequently repriced and placed. In the fall, there will be more deals.
+ [) X- [+ t4 Y8 C9 D1 ? Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
; u2 D0 q& V1 G0 ?. Tis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
" P, o" g, p$ \! G& m7 q4 v+ Jgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
) W) X; }# h, Y2 Lbankruptcy, they already have debt financing in place.- N. y; x+ d5 |- z
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
( u" Y* X$ O" w) z3 i& _today.
o# x K- z, `8 }3 f" O Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ ]0 T) L" t B8 I+ a8 X" n remerging markets have no problem with funding. |
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