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发表于 2011-9-17 13:16
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Current situation
2 |) g3 C; k4 a The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
) H! b/ t! s" tas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, D6 Q4 m/ t) Z5 _) U. Limpose liquidation values.
0 Y2 g6 o( ?' y9 q In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ O& q1 `; K: T1 C! }0 l% U) c6 TAugust, we said a credit shutdown was unlikely – we continue to hold that view.* C6 F8 { ^# x- ]
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. C/ {6 S6 I3 W' L
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( M4 Z7 @! q# j0 L4 i
* p! r9 m# }6 j, TA look at credit markets! v# u8 ~' ^) y8 G
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
2 K; n+ s' d0 Q* {' _5 ~5 m1 _September. Non-financial investment grade is the new safe haven.
4 M: _" G6 ?- f( _* M# @1 o t# l High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 Y( p2 @. i8 X! X3 \& D1 P
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1- X/ s& p4 [* x ^5 e9 ?# h- Y4 m
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( s9 p9 k' ^3 F9 w
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
& Q6 X% Z p r$ tCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are( U$ Y! A. r' B$ _4 h
positive for the year-do-date, including high yield.
$ f4 O3 ~: }, q' A3 t7 ?: ?' D) R Mortgages – There is no funding for new construction, but existing quality properties are having no trouble' m1 V# E. }- L
finding financing.
, l! O7 s) }# S& ^4 k6 s Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they! d# e r/ ?5 F9 f1 X
were subsequently repriced and placed. In the fall, there will be more deals.
- s% z5 R M3 ` T% y" V$ s Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and( r3 a8 _/ B" w! b6 D2 V) n: k, G: C
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 i4 d' P# b# c1 I s* o* Y5 Sgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for) y+ o% Q( z& F1 a
bankruptcy, they already have debt financing in place.7 ?5 ], ^3 ?) k* j/ G$ a, B6 k \
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain3 j: E7 O% k) B; t* h {4 Y$ W$ b
today.% D& T0 o6 k+ Y. f
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- Z- W+ z5 w' w# A5 w
emerging markets have no problem with funding. |
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