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发表于 2011-9-17 13:16
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Current situation
, ?8 M3 Y, G; W* j The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 T7 s1 I& ~' {9 o& @0 z
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may( y/ F; | j0 G {
impose liquidation values.9 a/ W- V' S" w2 R# S
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In* W3 Z7 m* _# J" N. a9 C
August, we said a credit shutdown was unlikely – we continue to hold that view.
! C. X. o2 A y1 m The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
8 P. a/ l# c5 ~& s: Iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets; c5 Y$ U1 r( [
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in8 N2 w9 l/ P4 D6 u6 q
September. Non-financial investment grade is the new safe haven.0 k) d8 p! b+ |/ I- V4 J5 N
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%; a0 Q) E! Y* } d2 E5 i J
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $18 [9 k& ~5 m9 U: x
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have" F& q1 M3 ~- U% x5 m. o, P
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
4 I7 k% e ]. i! I% B% nCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
) ^9 `# L8 x6 m' |9 I6 k' ]/ {5 spositive for the year-do-date, including high yield.1 B J; ^3 {% K2 Z; p l! }" j
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble% p# v8 a- O: `& {0 }
finding financing.: D. Z" z" j6 g3 S
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
( k( [' n5 z2 [/ i: twere subsequently repriced and placed. In the fall, there will be more deals.7 Z8 W. U/ _; A2 Q" r
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and0 ]7 L, P( {% u: ^# o* Y6 G
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
# a1 ~# p' A A0 K$ [0 G+ pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for* K2 e$ ~ A" n* c% ]6 J0 s% E; G
bankruptcy, they already have debt financing in place.- ~8 ~( F, z: t9 ~& u
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
8 d- h9 v- b# ~/ w: J& t( gtoday.7 c: H" Y0 c2 H# n: [; @1 T) [4 b
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
0 X9 I1 D6 c& ~" d) aemerging markets have no problem with funding. |
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