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发表于 2011-9-17 13:16
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Current situation
) J& d/ O6 f+ m$ r The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ @' V1 ?$ q: e; ?
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may: x, A" ?: _2 B$ d( ^' M% g
impose liquidation values.% y" X; Q8 _4 h5 P3 z( i! x7 P
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
$ I2 S* o. h* x4 \" F S4 M! lAugust, we said a credit shutdown was unlikely – we continue to hold that view.
/ k& H8 v6 ?5 K1 ], H The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension! W" m6 Y J; g8 `
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets6 O R, i& }9 h: H# P
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& U$ d) T- d' n9 O7 w8 ZSeptember. Non-financial investment grade is the new safe haven.0 c! E7 K: S% N, f
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%$ S2 {/ F, o8 f/ F* S- [1 W& o
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1) N& p% ^ A* v6 k0 C
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have% A- K: A, O9 P; Z( I+ M
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; O% g9 h3 G- H: `( qCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
4 U0 J) y9 }3 i( t% k2 z( _positive for the year-do-date, including high yield.
; s* p ~6 F/ V( ^ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble( ^9 |8 r$ m! l0 t/ J
finding financing.) _# J' y, n& U* u8 @: q/ y6 O
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
3 X* k$ r' [) R8 [) f0 b& _, qwere subsequently repriced and placed. In the fall, there will be more deals.
5 ~" s, I5 e, e Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 Z7 q! g# z4 u9 Q
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
" K) T4 R8 N* @7 G; U i. Zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
& o' C0 I$ t+ A. j# Sbankruptcy, they already have debt financing in place.6 z" O& h( F% P, |, q5 U0 {3 E
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
; c0 h) r ]1 F4 V. j% Otoday.4 ~* c* I1 F# q$ u- I5 {
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
% k; H+ t5 T3 f0 k( s( b) temerging markets have no problem with funding. |
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