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发表于 2011-9-17 13:16
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Current situation
* x( U' x" ?5 C) D The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
B7 l! p# ~, B5 u3 N8 [' aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* W7 E6 H; E8 j% w$ w
impose liquidation values.
& z. e/ c% r0 L4 l. f In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 [* V, W' b' B5 E% \ ]4 d, W4 P
August, we said a credit shutdown was unlikely – we continue to hold that view.$ b1 `. A3 I& ]/ H
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension1 Z- g4 j2 b) g J" \+ ?7 X
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets8 }( k. R$ F& D% J0 a4 L! \# T
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
" U+ [# {2 C: S' YSeptember. Non-financial investment grade is the new safe haven.& V/ f7 ^4 Y& { @
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 z" h4 Y' w c! C
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $13 W: h2 V0 K% s2 Z% D# M1 H9 ]" I
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 q- i1 |/ [7 z$ X7 X
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade8 T; U, K \) o0 v8 d% F D
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are A I+ c9 ]$ Q8 H& `
positive for the year-do-date, including high yield.8 P" o7 ^! o2 a2 q z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
9 ?' e+ b8 \1 ? Mfinding financing.4 V* g' u; L# ]; e8 D, r' |
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
7 c. ?; ^& K& q6 Gwere subsequently repriced and placed. In the fall, there will be more deals.! ~. [; |& U) u3 r
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& R' m u3 {. }4 u( o# l
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 U, [+ Q2 u0 Y0 K0 ~# w& p
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
. ~: s& e4 Q/ S& h! z7 q0 lbankruptcy, they already have debt financing in place.
2 \" [4 A: h+ m9 U7 S9 v European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
5 J, a6 H' J2 w+ B _- ]' wtoday.
1 P5 c9 ?5 m% d* c5 o: Y4 { Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
# F& O! T, U. W+ Kemerging markets have no problem with funding. |
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