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发表于 2011-9-17 13:16
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Current situation
! s. X L( P( w! M The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! ^; p& `" W% v+ x0 ^* A
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may, y+ e$ {0 k, A7 G; [7 f" R& ^
impose liquidation values.! x8 J( N) k9 N1 y' N
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
: z; P4 d. N# z) [5 d) k4 m2 W$ f: @August, we said a credit shutdown was unlikely – we continue to hold that view.
, _ Z& B; A2 ^" o9 n The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
# i' c. a0 X& G! Z8 `# U$ H! K+ tscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
( |6 U: O9 H) a; L8 E Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
0 ?; b( a, H, M u9 ~September. Non-financial investment grade is the new safe haven.9 w, s6 c6 g2 G
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
" m1 T6 I) D) K2 t: e: Ethen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 n# q5 N; b' o8 v% t/ C1 i5 K
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
2 t9 i+ J$ G1 I, _5 w9 N/ ], J: naccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
! g4 p5 a3 R [, s4 s5 w) j rCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
: t+ @/ l. b/ A7 n1 O3 {% tpositive for the year-do-date, including high yield.$ ~2 J' p& ~) A6 J
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
/ [8 h, P, X# `finding financing.
6 g" N" L0 V9 q( S, Z- j Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% z& u6 ^ k8 b# z- K! q
were subsequently repriced and placed. In the fall, there will be more deals.
], N7 M" q8 ~3 D* b8 F5 F Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
0 N5 ~) p+ @- ]is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were- O. o4 X" Y3 ~
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for( q0 q# F' a( R: b6 e ?3 a$ @
bankruptcy, they already have debt financing in place.
$ B+ ?+ b% s5 h- ^3 B4 U4 Q 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 in0 e+ E8 `. A- N& I6 T$ a
emerging markets have no problem with funding. |
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