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发表于 2011-9-17 13:16
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Current situation
2 h! s/ u4 L, W" | The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long5 w" {, p2 M7 R1 ^: W9 `; p" d
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may! w8 q' C! F; V% Z0 l8 B
impose liquidation values.
1 A ]' H- ?( ?2 M5 q In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In9 Z4 L6 @4 q. e/ \. ^9 O
August, we said a credit shutdown was unlikely – we continue to hold that view.
- }5 k7 l0 }- u; `/ |' e! I The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* o3 l1 U7 }: c# J7 z7 s
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.; T6 a7 l- a" I W; }
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A look at credit markets
! \; G; B/ T! X Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, S! _; P+ K1 v) ^# FSeptember. Non-financial investment grade is the new safe haven.7 {& ~: T7 {! N, v- _0 F9 r+ R; H
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
9 Q- t. X0 x! _7 u) \0 cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1+ Z8 F' M% Z+ ~+ P
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
0 V0 j* @ C8 i/ I* faccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) H2 \! B' T' P
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. @ N/ ?1 h8 g; ~- ?/ V; U, p
positive for the year-do-date, including high yield.+ [3 s1 L# q) g! I2 `
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble0 \% k$ ?* z7 q1 ^; u
finding financing.
0 \0 m% @$ ^* w* z4 z# B. G0 [ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
7 E( _$ `) q, i* u3 M: ewere subsequently repriced and placed. In the fall, there will be more deals.
6 E6 n2 \) l$ |' |+ S% e Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
. Y5 @+ C" g6 qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
; ?+ k4 ]! e7 v, y# k+ J9 ^going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
: F1 O _( ]% Mbankruptcy, they already have debt financing in place.. b$ b% t* H9 [* Q8 O, ?& t
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
# s4 |* K7 H9 b/ Y: T$ |) [today.& `2 {% L; R4 j% w g9 R
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in0 T) z0 o8 {; n" K8 a& A
emerging markets have no problem with funding. |
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