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发表于 2011-9-17 13:16
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Current situation
& i1 X0 s; J0 z* @1 _, @- t& X The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long+ ?; E1 o. y- \3 j. @! o. ]
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 I5 W1 \3 H3 A: k4 z8 D: @impose liquidation values.+ k C1 W5 j J) z" Y$ Z
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In0 i4 o1 C' [& \0 l `/ ^
August, we said a credit shutdown was unlikely – we continue to hold that view.
1 N* Z0 J6 y: T2 Y' V, |6 B% k The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 U" c5 {( Q2 r' ^
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets: }8 X! [% C) U5 k
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
2 w* r) ~7 ?; {6 w# h$ T, oSeptember. Non-financial investment grade is the new safe haven.
! n0 m$ D' n$ F- E High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 B+ M q, X( I3 b" T, z& y( N
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
3 @* u6 p% Z! I7 k1 \: R0 n9 ?+ V% f$ pbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! Z. s+ n+ a H' ]
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; Y) C& b4 {8 l& H( [& S+ I; vCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 e! @0 u7 }4 p# ?) D, ?positive for the year-do-date, including high yield.
4 o7 x+ W( C) n" A4 F0 l3 O, {' J4 B* e2 g) ^ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble8 |# Y3 H; N' \4 \9 y' K
finding financing.8 h+ B4 A( |$ Y; U
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
: F; V# i4 ]1 H/ Uwere subsequently repriced and placed. In the fall, there will be more deals.6 b2 B, o. F P |+ K
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 a+ E6 a! u* r$ d0 k* @! ]is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were, K3 j" d1 i2 v+ O3 C7 P
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for5 P2 U8 v6 t7 T; s8 u0 g
bankruptcy, they already have debt financing in place./ {/ t) f: u) V! R w
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in, p+ D: I" u) J1 O3 P \# w2 ^
emerging markets have no problem with funding. |
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