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发表于 2011-9-17 13:16
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Current situation
. x: K$ x* a. d! r6 S6 N The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
4 j* I6 H5 B& Oas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may# M& f% t; Q" d& N6 c) A& o
impose liquidation values.5 a$ ]4 N0 y8 Z/ h2 F" {
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* l8 E! P* n% hAugust, we said a credit shutdown was unlikely – we continue to hold that view.( V8 A; a, k( O, y- Q: e" h
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 W1 M' W8 ]& L) b5 e
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets+ D! D9 u7 P; D6 F. y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in8 y u6 h/ P, Y( d) V. W4 t
September. Non-financial investment grade is the new safe haven.2 ]4 j2 f( u6 r* Y% k7 ^, p
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%( _- D/ h/ V# U* V$ X/ z9 a p3 m, Q
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1, c/ h$ t' ?/ T _3 _+ d& e
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have Q, q3 n* I4 ^
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- R. |) n) l C8 N* b! iCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
) c2 K6 z) w) c. Z; Ypositive for the year-do-date, including high yield.
1 Q7 [4 F) i2 S0 |, x# m Mortgages – There is no funding for new construction, but existing quality properties are having no trouble4 Q4 \, }+ U% c( E ]
finding financing.
% I5 K& W7 k/ N) ~7 x, Z7 n Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
- S0 O) w/ q; Q- owere subsequently repriced and placed. In the fall, there will be more deals.
" ~+ j5 v1 [* O' [ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
% h4 S, U3 j$ C" Pis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
# {/ `4 N5 N/ `" ]/ Jgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
6 w% u! H, L# {1 D1 wbankruptcy, they already have debt financing in place.
, E8 l2 ]+ s3 f3 ^0 q+ y% G/ a European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
$ o' z9 \+ F1 Y7 D. P# btoday.
# V1 h o5 c* H8 ` Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
) _% B, ?- k3 M* Remerging markets have no problem with funding. |
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