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发表于 2011-9-17 13:16
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Current situation
0 ^) T8 ?0 R! T* G$ R: g The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
# T: r! a0 M2 ]$ zas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
* K1 D! V; N/ ~# N/ ?: s2 jimpose liquidation values.$ _2 _+ l0 W+ k4 B' X q$ x
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
; i7 I. E9 K# _9 H8 d! p% t$ GAugust, we said a credit shutdown was unlikely – we continue to hold that view.1 n9 n3 I' I. N5 P6 x& U* j, _" L
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
: O% {- L. c& ~0 L2 Xscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.6 ^; K/ L) c* w! |; r6 t
@: h0 ~. [' ]; {9 Q% E
A look at credit markets; t1 ?! G5 }3 U3 Q6 z8 X4 Z
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
) P* J5 j7 l$ a2 k. ?8 y; E' {: c" NSeptember. Non-financial investment grade is the new safe haven.
% {% A( `& K* @ R: E r High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%" |$ b# ]; o; s+ R/ G7 }
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
3 B: }0 d& D" q2 q! Zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 Y9 ^8 }7 t. C# f5 h; d6 w
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade* X3 x3 E Q* _$ _! W6 u
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are2 v) }" ?* |( M& D& S
positive for the year-do-date, including high yield.
" k& K* O$ M6 y$ |% n Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
) [ @$ p, O3 t; Y% Y+ C: x6 U3 Ifinding financing. _; H4 Y- s/ Y" G, O& f
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they: x4 g2 J( ]5 n% ^
were subsequently repriced and placed. In the fall, there will be more deals.
0 i0 `; N. @* @* i6 n Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
1 O0 N7 f' c# g1 {! Pis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
3 i% `, B5 W: X% o3 v) ]going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( k7 ]6 H3 r! O1 R2 Y* t& x7 Gbankruptcy, they already have debt financing in place.1 g( ~* N7 n. o* u
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
3 r4 ~* [0 G" c+ C* a1 S( j1 jtoday.
) z& ^# @/ i1 t+ A" V) M Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# w" I- ^2 z7 j) {. p" J. D
emerging markets have no problem with funding. |
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