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发表于 2011-9-17 13:16
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Current situation
4 Q, j* L$ p: Z; c3 j The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
" e# U s7 K# I( O, ?5 j1 Was funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may$ R( k$ z4 e7 S2 t* `4 V
impose liquidation values.
; x0 J8 ~4 T" o3 T4 ^0 v% _+ F. S In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In& A9 X! _3 \7 _% j( D, i+ D
August, we said a credit shutdown was unlikely – we continue to hold that view.
9 G9 t0 q8 @- ~; y# f! { The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. u; m6 _! P& C5 H; H! oscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
* K+ {4 Q9 ]4 }) N3 M8 Y2 K Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 A! V# v' }) R' \* f: r7 pSeptember. Non-financial investment grade is the new safe haven.$ ~- X7 _* T" n- M$ p) d' F
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
, V+ K/ n+ L% O! R" \/ @9 q( h2 w+ p- Ythen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 {( u# i U k2 D9 `5 r
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have. H" h- s$ } u
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ n/ k+ M8 K, L' T* \( U
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are7 |9 Q7 O+ {: R. j
positive for the year-do-date, including high yield.
# f4 o) R% g' M Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( u2 g. p* ^1 j K" X( D2 c% x. D, kfinding financing.) U# d( @& @1 D2 s% X) p
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
* ]- w6 O' `1 s7 _) Cwere subsequently repriced and placed. In the fall, there will be more deals.
; {4 K5 W5 {, ]5 p6 V) V Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* j$ G3 w( z$ P3 h: M
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were* h& G. e4 z4 ]; |4 E9 T
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
! t' V; w* c# T1 Ybankruptcy, they already have debt financing in place.0 E! q1 x5 Y( ?$ v
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 y% ~% f. G+ E* U& Vtoday.1 }! c# t4 K0 r/ _
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in1 N$ \. O7 c- W$ B. j: B1 g
emerging markets have no problem with funding. |
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