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发表于 2011-9-17 13:16
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Current situation
, J4 ^- l: L9 \9 E, W' u3 K6 q0 H The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
9 Y5 U' F" a; n; Zas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
% [; V& @: F& z: Y6 C1 v' ~; E( iimpose liquidation values.
2 H3 G/ G; {: @ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In! {" o) U6 s# g6 F+ F9 N& g
August, we said a credit shutdown was unlikely – we continue to hold that view.( g# n- @! Q3 E: `% Z# m/ d
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
$ V6 |2 d$ G9 h; Vscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.4 l0 ~/ V. O L
8 a3 `9 f, j5 Q E/ W/ N; u! g
A look at credit markets" A: [) S: ~* k, K1 o. b4 a
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in" {( g0 `" F) {
September. Non-financial investment grade is the new safe haven.) R( ~# [ y1 G O7 a/ D4 P
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%% s- t# F( w9 |7 D) \3 S9 I
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. [0 a: i+ U9 ^9 f
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have* o$ P$ `7 F* {( f9 w! f2 J6 V' z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! d% E$ |$ N/ s* E( K
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 [ T( t- k: e, j3 K4 ?( f2 A+ H# tpositive for the year-do-date, including high yield.2 o6 N, K3 \4 o; A4 U d
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 q3 F2 l8 k( m) y4 v( ~/ v5 e1 ~finding financing.
. x2 k( m0 P* l$ F Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they# w; L8 O6 Q. M- z" p. q
were subsequently repriced and placed. In the fall, there will be more deals.
, W; _0 Q1 `. G7 ~ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
( }5 Z( P# ] P$ {+ f Fis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 K8 p6 ]1 [. V" k3 @going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for/ x) i' P/ H4 J2 o( S& |( e
bankruptcy, they already have debt financing in place.
( S% ~1 o4 d, } European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain5 M+ u3 E/ P5 r3 z
today.
, j: U) i5 ~ w0 g E; x& P: N! u Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ f% a/ Q0 S# e- R1 q7 r6 K+ N
emerging markets have no problem with funding. |
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