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发表于 2011-9-17 13:16
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Current situation
2 J" _2 `( B! B1 j! |6 C" I The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& f. a$ I* f# E! R2 |" h& k
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may1 I( ?. d8 _- v4 W
impose liquidation values.
# h% ?" @0 q' h e" G, i In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 \* {2 h- ~3 k B/ s1 l
August, we said a credit shutdown was unlikely – we continue to hold that view.
# \5 R: S5 H: u# Y; j* c5 n4 ^ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 u/ ^3 S9 X7 X6 k% P
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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7 Z! I2 M! p8 |A look at credit markets8 o( n# i4 c1 U6 L+ Z, L# }; Y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: ^: h- `0 Y+ C+ mSeptember. Non-financial investment grade is the new safe haven.
- g9 _/ ]' Y- }) Y$ O High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%# H p( ?1 _. e2 a" ]6 ^! d
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $11 ^6 _7 l, g5 s1 K$ P
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 a8 t7 {, i; r" h7 F
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
. j. l% W% U2 l# h' W2 w3 w' iCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
, G0 A* G4 c& l. \7 hpositive for the year-do-date, including high yield.0 G' P; W* c) {- }4 q) h" [
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble4 S, }' E2 n, x7 T- n
finding financing.
4 Y; M( o+ I4 R# R0 D h Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they1 `1 C1 T9 q% n4 w" E. v/ F
were subsequently repriced and placed. In the fall, there will be more deals.
7 a9 ^' j# C4 s W, S Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
- ]. ^/ r3 A) [& ois now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were" Z. Z8 U6 P& Q, Y+ N
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for% @5 x1 L0 u. i- U- Y" B
bankruptcy, they already have debt financing in place.; {! V1 M3 h% G0 k0 H- ?0 A
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ G; b) ]% }! U# z- a+ d# a+ x
today.
- j! C6 a( s. ]5 T0 H Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
8 ^2 o2 H3 a1 ^2 lemerging markets have no problem with funding. |
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