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发表于 2011-9-17 13:16
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Current situation
+ J) V* @ G+ V% K The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long j; Y) V8 {% L6 H
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may# n7 `' M& E6 ?; D8 n2 M0 t$ |; v
impose liquidation values.
$ i8 q% Z; P" B/ e In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
! f" Y8 K" F: Q& X5 vAugust, we said a credit shutdown was unlikely – we continue to hold that view." V' w# ~" v1 {& D! |5 y
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
' `5 \# w4 T# a6 L3 D' s: rscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.# ~5 @ _9 H6 x% d' w
5 B6 q- V+ i, W4 m' @ K
A look at credit markets
7 V& J& @$ q! W% c+ |$ d5 F: ? Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in' _( ] H0 Q& {$ R. [( y* l
September. Non-financial investment grade is the new safe haven.
: ]# S2 c' n' E3 f* U* q U High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%$ Q# Q& L$ \" V1 @$ i
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
, H3 ^) v# M9 q) k3 z( ^' Q+ pbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have: F: O3 {. E$ n6 T3 B' g
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade4 v7 C' Z# r' W t
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- i% |* ` b1 s! |/ S; Ipositive for the year-do-date, including high yield.
6 l8 I* j. H- K4 d0 K: L Mortgages – There is no funding for new construction, but existing quality properties are having no trouble j. n9 |1 u9 f2 w; j# v: L
finding financing.
2 w+ `% N4 \+ q" |5 A8 r Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they* M: @/ Z- \9 q9 z9 n
were subsequently repriced and placed. In the fall, there will be more deals.
# e. y8 Y1 Z- { Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 k" X2 D3 B0 Z C- L. F
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
6 f: r8 o' k% \: I$ i jgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
& p( n; ~% O4 m- s' J- z: Mbankruptcy, they already have debt financing in place./ ]; x6 z/ v2 a+ B# a4 x
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
: J- G0 i+ \" E5 v+ i( ~! s9 |today.
; C, e5 M& i" R( a$ x" | Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
, T( T. ~1 t, {1 semerging markets have no problem with funding. |
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