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发表于 2011-9-17 13:16
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Current situation
+ _) `% p8 U9 _* R The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 a* }* @3 v, x3 l
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may! {5 f0 L+ X' ~; R
impose liquidation values.
7 k+ G6 s. {3 o$ M/ E1 ^ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In/ K6 r4 f( f( S# W/ J, v2 Q( ~: j2 k
August, we said a credit shutdown was unlikely – we continue to hold that view.
6 ~7 X+ n- c; z4 I0 g) y) ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension, t* V& e: M* b4 R9 a
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.1 ?/ I1 ] h1 s% p
& s1 \, O; ^/ J4 v& ?' Z nA look at credit markets( C2 [; }0 n' w5 H0 W5 v5 X! l% A) Z
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# J5 m. Z4 h& w$ B% v, R8 _September. Non-financial investment grade is the new safe haven.
. K+ M C- Y: o$ f7 n High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%: `2 Q+ B- }% ~. A
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
4 p, K6 F8 h. _* `9 ubillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have. y3 @, |+ A& l) C
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; _% S# N) V4 f4 f7 LCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are7 D1 O0 a8 @" Q7 G
positive for the year-do-date, including high yield.# C3 o x% w/ u' X/ o6 f2 z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: ^6 K8 k2 |) J: U" l& n4 p# ^* dfinding financing.
$ \: |5 G9 L6 P Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 T( G, ^: D- ^) o; Nwere subsequently repriced and placed. In the fall, there will be more deals./ }/ i% k$ j* @# a7 q
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and( {5 K% z1 T2 ~' b% A- Y
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 H; Y6 R6 ?9 l% N# a. ~
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
/ I; M, r/ R( |0 [* Sbankruptcy, they already have debt financing in place.
, g9 @& A* u5 Q1 s# `2 A' C European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
, }8 q3 p% v2 @" S: Utoday. Z6 c9 }* ~1 F/ O0 n! L% ^, X
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& T3 U4 k$ R3 }. P# u# d- aemerging markets have no problem with funding. |
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