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发表于 2011-9-17 13:16
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Current situation
% y, D y) n% I+ J$ z- Q. t The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 }8 S. i$ [$ n/ n
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may4 f5 M- K4 g9 N1 \
impose liquidation values.
1 L% l! r( B+ D! V% h" e0 [ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# {7 J( b/ x! Z6 _& s7 {5 _August, we said a credit shutdown was unlikely – we continue to hold that view.
- P, Z( z7 h4 l7 Y The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. t6 \; d A1 a; u6 O" X3 Z) h4 ~
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.0 e/ I; r4 k( L, c( b
, ?% \$ h2 w- l6 u; ~3 b; AA look at credit markets
+ B$ x* y' V+ g" d; s Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in6 p+ E& b" c2 K/ T6 ]; T# [# i
September. Non-financial investment grade is the new safe haven.5 O& v8 Z6 R/ {% u
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 g: c3 b& w" b" K0 O
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: d7 l( p8 M$ }6 M
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have, L2 F7 _8 Z% G# O4 r
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
% k/ l# D) F% [( h, \4 F" h' _CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- q! W, h) p! A z( \positive for the year-do-date, including high yield., ]$ I# J" \3 V7 f
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' d, u0 U( g3 S! rfinding financing.
1 v7 Z! d+ Z W5 D& y. a. E& D Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they$ r/ r( x% O( f3 `- e
were subsequently repriced and placed. In the fall, there will be more deals.; N4 m" }" U! G P, ^% D
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
9 P. B% k/ t2 ?6 \$ z! r1 }5 qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were; H! ]# A6 X1 R) H" a" E8 T4 E
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 ]$ ]) g, i& G2 d) ]
bankruptcy, they already have debt financing in place.0 f- L) q% m# e! f; c5 ^; F
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain. z5 a4 \/ R6 c# g8 B2 E( J+ _
today.7 a" K2 }& T+ \& C
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 F& g; ?# r) p2 y! |emerging markets have no problem with funding. |
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