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发表于 2011-9-17 13:16
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Current situation
+ t. Y3 W x) I7 ~5 H# _7 J- t The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long1 S- M; O* K, S/ C
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! w5 W4 w8 L: m9 W: g; Yimpose liquidation values.+ s+ W8 H; m3 ]
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In. {8 t" W1 ^8 d$ _1 L. ~$ q
August, we said a credit shutdown was unlikely – we continue to hold that view.
+ l, Z5 ^$ T7 n- i9 R The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 x5 e8 q5 K. l% \" Q( C$ G/ K4 U' ^scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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/ `; N* i( D aA look at credit markets
- @; C% m: P9 z R4 f1 v Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 r! z+ O+ t; v; B# N/ f ^September. Non-financial investment grade is the new safe haven.
+ z, _5 I' K- q% f) A High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
1 g$ o( v$ j$ G' ]then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. `' S3 I- a1 {
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
% R0 N6 v- f) p/ c" h4 h$ a7 `1 Naccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
$ _2 v% J" u* LCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
4 o8 h' e7 N. q5 tpositive for the year-do-date, including high yield.4 ]( i- V. g9 w* E' _& x
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble6 i1 b2 p, B, h
finding financing.2 q% m0 G1 m! U* A; \
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
/ @( i5 E! s# U4 }+ w. Q7 V) T0 Iwere subsequently repriced and placed. In the fall, there will be more deals.
u7 `( E0 B; v8 ~) p. [ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
: g3 [8 G* N, S# e$ V# y7 F5 @is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
9 [. J6 U! m6 ^: b) s D. d l$ bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
6 f. u6 X8 O4 x5 u* Qbankruptcy, they already have debt financing in place.' s7 d2 ~7 ` Z0 R+ O
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 V2 H5 a1 r2 [( a7 m! t6 P: ftoday.) j1 S7 f; T: R" }- J( K) _
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in g2 u) O1 \) b# z- c. J
emerging markets have no problem with funding. |
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