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发表于 2011-9-17 13:16
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Current situation
( |5 V1 n5 A K; t% |5 ~ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long+ U0 f# x J1 c7 n
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 c8 j& F5 S Simpose liquidation values.
4 m2 ~7 B+ z% l& l6 i In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In$ {* _7 J- x0 d
August, we said a credit shutdown was unlikely – we continue to hold that view.
c, R9 |/ @, m S; \6 G The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension5 t$ c9 Z7 L) W
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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0 D) I4 }. x1 N% TA look at credit markets
+ \* _4 }. S" G/ D" y9 k. ^ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# S8 ?5 l7 o, ]1 C }0 _September. Non-financial investment grade is the new safe haven./ ~. c2 c9 W9 e8 r
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 A0 ^' o: J5 W. b
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1$ T3 b( v" E7 c7 p0 O' N0 {4 [4 \
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have+ ~% \0 X* ^; H V6 C, Q; j3 A: g
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
2 ^, B8 z6 [5 l6 n/ z# OCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are9 A: z. ], J( b# l! \- A
positive for the year-do-date, including high yield.
, X2 _) `' Y2 m Mortgages – There is no funding for new construction, but existing quality properties are having no trouble, M3 @6 m0 E6 Y4 \! e; }
finding financing.
; ^" {" g$ a" x* G5 t Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
/ y. a* x4 X' F: V' J' X) Twere subsequently repriced and placed. In the fall, there will be more deals./ J* e# U( v2 }; E; B+ t
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ g; z: e$ j! I& a9 {' w# M
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( \+ R8 K: s1 D/ `( ]. a" q1 c
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for }. B5 C: U6 F8 }- z$ U5 T+ K
bankruptcy, they already have debt financing in place., }. G s! @+ k2 G$ h3 o9 e9 W
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain# H6 s- P% h: Y* B- d" t2 o
today.! {0 ^. V. J1 e+ |# V5 U* a
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in c9 k$ E! u7 X4 ~
emerging markets have no problem with funding. |
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