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发表于 2011-9-17 13:16
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Current situation
3 W! k- g- g1 M! k( ] The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- B1 V1 b5 c* P! @' j. V* k
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may! c* W# A5 _8 y
impose liquidation values.
1 @. l- c; Q$ k* Y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
8 k' ~$ L6 {! C) m7 N! E: aAugust, we said a credit shutdown was unlikely – we continue to hold that view.4 @2 |$ ~6 Q5 _- _! y p
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
# t, E- j( I1 p6 x8 s9 Escrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.# C/ c7 o |+ f0 A& u0 I3 p( X
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A look at credit markets
6 ?* o7 U: {1 [3 t) n: ]. R1 _ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in) z" l7 x2 I1 N. d1 a% T1 t9 J
September. Non-financial investment grade is the new safe haven.) d; w: K; [: J9 @
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
3 Q- C: {- K9 h3 w4 f) q1 _9 E; ?then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
) m4 Y3 } M- M! b5 v/ `7 Sbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 t6 Q1 d3 U T5 W) k& _- c+ J3 d
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade4 J' Q8 D( d1 {/ [4 d6 `
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are+ d& `8 r( n" C5 \8 w
positive for the year-do-date, including high yield.
6 w6 H# h9 z( l. ~ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble7 j1 {1 I9 x6 f- \7 ?
finding financing., n2 z+ \+ v- u1 G
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
- _. |) W; F6 Qwere subsequently repriced and placed. In the fall, there will be more deals.+ f: D* z% T5 \1 U' t9 `2 V
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ h' w7 Y/ m& o& V6 s
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
: e2 ~4 F" x O& Zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for1 T( d3 z# i9 Z7 r* O7 `
bankruptcy, they already have debt financing in place.) R; |2 [4 z$ {2 v. }0 V2 \
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain0 {7 L3 ]- Y# D( v4 O/ i
today.) W& o" J2 z7 P
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in6 c2 M! F/ Q7 ?. x& U; {- M
emerging markets have no problem with funding. |
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