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发表于 2011-9-17 13:16
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Current situation
% N5 L" v# `. C4 V6 U The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long x- O4 x' ]+ P y1 v4 z3 G( o9 X Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
; r1 r9 N/ @* ?3 dimpose liquidation values.+ y* O' c$ X; ]6 ^: c) G1 l
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In% J8 r7 {% l0 l; ~7 x8 b
August, we said a credit shutdown was unlikely – we continue to hold that view.
7 H2 k, E, W! P* l, ^ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension( Y! \0 d# R( X& K
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.6 J8 A4 A, P8 \7 N1 F
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A look at credit markets: |. q* w6 v1 \ z
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in4 F- B8 i4 Z% b, Q
September. Non-financial investment grade is the new safe haven.9 g- _$ ]8 u) M4 F5 B
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
# }0 U" i. ?" ^/ j1 {then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $12 f: g' `4 ]7 R. W
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have) J' S+ r2 S: R2 ~: `9 {0 _
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade8 y! E5 L# d) l- j& f7 |; R/ f
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: ~; w; O, O, g' U# L8 L, k
positive for the year-do-date, including high yield.
) M9 {; F! f; e* a- n Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' [* w: C* A. }$ Gfinding financing.
" T( K. r, W- R2 g9 ~# I8 c9 H Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they8 ^$ b) }5 n, E- ^
were subsequently repriced and placed. In the fall, there will be more deals.9 K5 N2 C5 \' y- E) H' e
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and7 U: G3 U, [% L. s
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were4 W6 s8 M2 U$ W: N
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for r4 Z- V) b( Q- O$ F. N
bankruptcy, they already have debt financing in place.
( J# r+ V$ I' H& a' `" y& @ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
, N1 @8 X% ^3 w/ D; ttoday.
1 p/ g* @" f* l3 X4 n Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ i! }! [, N) @% |9 C7 r3 l% P5 e. i' Iemerging markets have no problem with funding. |
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