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发表于 2011-9-17 13:16
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Current situation
# Z4 n" }4 j& A; K1 [1 A$ g* F" E The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long* n+ B9 E: L' k. k
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
4 q# ~% U i3 R( @' x( Nimpose liquidation values.& J% G( V8 a% s9 q: m
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In# J, p0 b% _1 i" Z+ I* z
August, we said a credit shutdown was unlikely – we continue to hold that view.
8 _( I0 ~8 }$ m! h W The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
" d8 l& D- J) wscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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7 R# C+ k6 g( g5 G7 K/ U! G& nA look at credit markets+ \7 d _3 h3 j' j3 A
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in6 U- k, Q0 ^# G0 ^, r* l
September. Non-financial investment grade is the new safe haven.- U7 K. {0 w2 x
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7% K5 v8 F8 J8 ~/ ^, @0 `+ _
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
3 m: O6 y. H% ybillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! i3 B) l. q3 J& U
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade% Y3 N5 `# }0 m; w
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
* `* `& }; x/ a4 I0 Qpositive for the year-do-date, including high yield.# K' r4 V1 D' R5 v7 F! P
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble/ F: z( m7 [/ s4 u# W
finding financing.$ y, |7 j. S7 B: i p+ I# T, A- `
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they8 Q( H; _2 [1 _# O# ?" H t
were subsequently repriced and placed. In the fall, there will be more deals.( V, z. z5 x: X; @/ ]/ h4 I! m2 x
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* ?! u1 Q9 j( e c; ]: @! G9 }3 b1 X
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) N$ r T; ?, a0 g T% R0 Hgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& z# e1 ^0 _" _* f' r
bankruptcy, they already have debt financing in place.9 ` h f% ~; W J6 [
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
# c) q' q1 H- v, v3 qtoday.9 a- d7 |) f" M: S+ [
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in1 o( v/ f$ f0 _; a6 A! _
emerging markets have no problem with funding. |
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