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发表于 2011-9-17 13:16
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Current situation
1 s; c1 p7 v2 i+ X The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ F- I: ~9 x6 d* f4 ~as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 T/ t4 d6 s2 g3 Iimpose liquidation values.
% w* k4 M" m! A1 l. W In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
. U$ z8 j+ \; |+ Q8 @0 HAugust, we said a credit shutdown was unlikely – we continue to hold that view.
1 g. _/ o2 i* ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension+ K' P# a2 c+ H! y4 b0 k" W
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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! ~' [! i$ ~; y, b* Y/ Z" ]4 YA look at credit markets
6 B4 y% c5 F3 p Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 v, u8 J0 g5 C
September. Non-financial investment grade is the new safe haven.! d9 l/ U! I, X9 W
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
* h4 g: o, n3 Q y, wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $18 B. M0 j0 d0 i9 d( M; J/ d
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
+ _9 t0 O, @( ]" }: zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
8 w, a8 T* _' `: \3 UCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. i, W5 P% l3 C5 x
positive for the year-do-date, including high yield.; S" E8 [' q: J* E2 A6 ~6 q& H1 o$ b
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble4 W8 {" P+ t/ A8 F4 ~, U# Q: ^* R
finding financing.
+ e% G2 m7 Y' ?' c Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
# a0 h( J) a, }; ~1 hwere subsequently repriced and placed. In the fall, there will be more deals.
5 e# M, [, O- y/ X8 t$ R) U7 V2 i# c Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and. T, X7 K7 n: q9 w( _
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% ]7 S3 M4 P7 L0 w8 J6 _going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 H# c) o0 w- t2 R8 P5 \
bankruptcy, they already have debt financing in place.- Z1 S1 d. r K4 T9 L
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
" g- X& `0 F1 F" J( M9 `today.
3 B+ z9 g% R; N9 z8 q6 @ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in, m+ b* W! g6 q) T$ T# s) i5 D
emerging markets have no problem with funding. |
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