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发表于 2011-9-17 13:16
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Current situation$ f8 k3 D B5 M) u
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long% v1 H( T* H: o5 B
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ d1 i1 U: U$ himpose liquidation values./ w. i9 P9 W# e. P8 \$ J% l, U- b
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In- p: s4 y r# r) b
August, we said a credit shutdown was unlikely – we continue to hold that view.
% T2 Y. }( r6 t' @ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
" _) X1 n9 D, k/ G- J- zscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets., a' l' u# b) I9 T
* @, @; k- C4 U! g
A look at credit markets! t/ H$ I& I, R
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: x% F$ w$ S$ b0 z" \9 i A3 `September. Non-financial investment grade is the new safe haven.) F5 r/ a* {( R" P. O
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
I0 ]6 N Y2 q @* A qthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1/ T( o3 y5 h5 q1 {/ o+ Q4 D& `
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have# P; Q g5 _) y b
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade. L1 O" \6 s5 W3 J$ m
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are- y7 B8 l& `* D+ q$ E$ C) }) F
positive for the year-do-date, including high yield.- R% }- h: `3 B
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble2 A0 F: Q5 N( u- E- S4 P' ^
finding financing.8 u8 }/ f7 a: x( O% o
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
6 s+ }. n* t6 j$ N8 H+ Kwere subsequently repriced and placed. In the fall, there will be more deals.
, ]4 w! ]0 \, f: i* P m Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
; x+ H- _+ X: n9 Nis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
* f6 B6 \; T! [' m1 ~going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
2 z' [; G! e @9 D" z/ r% P( tbankruptcy, they already have debt financing in place.
9 J7 ~; `) i2 ]! m' d) @7 M! G European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
8 W, y. t9 ]* J; d$ \ dtoday.& J3 d" r! @8 W4 C6 i% ]
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in+ K1 E/ P( X0 z& x3 L
emerging markets have no problem with funding. |
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