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发表于 2011-9-17 13:16
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Current situation
+ R$ [* V9 Y* J8 R8 c The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, F" ?. J d0 D# r( j' Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, m+ L+ W- K4 g5 ]0 t2 P5 I( wimpose liquidation values.% y4 k2 F' U- ]1 n
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In: B: | A T8 d8 N! D
August, we said a credit shutdown was unlikely – we continue to hold that view.
3 B D$ ~' j# j1 q# C8 ^: F0 ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' v$ A0 o5 ~6 I/ \; ?0 S
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.8 ^4 w$ \4 s @
, f0 D+ l8 u9 _A look at credit markets
8 }; W* J: ^8 Q0 f% I6 ~- _: y Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
; S; g. ]) Z5 r5 USeptember. Non-financial investment grade is the new safe haven.
" T. o, }2 `) S8 b3 U High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%& }& k+ b% c" K
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1" e0 Z, R% S, J# ]( h; h3 W
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
( G/ d7 c5 a6 waccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
& u3 O% R1 M2 d/ sCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 o1 B2 m' R; P$ {positive for the year-do-date, including high yield.
% }5 F0 W. C9 [' `2 P1 l Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
2 H' x& H. |# @% Cfinding financing.) L3 u3 j5 I! m( }( H4 A' L
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 _; L+ T5 v3 ?& B
were subsequently repriced and placed. In the fall, there will be more deals. e+ N# t( H! U7 a9 Y; C
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and% b* E# t7 i) z! F0 v
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
& V% Z2 x8 q7 g6 A- M' b ngoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 P* J6 f& \" D S
bankruptcy, they already have debt financing in place.: S& |9 [' E Y
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
1 R* u1 o3 J1 N* X; mtoday.+ |! S. W7 G3 g& I4 ~5 n0 i4 H& ]
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" U4 |# d! [/ r( W5 X5 m
emerging markets have no problem with funding. |
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