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发表于 2011-9-17 13:16
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Current situation- T4 ]- [0 A% M+ L8 v. N
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long* t+ @ z; b( U
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may1 y; z0 V9 ~6 h6 E
impose liquidation values.- U* n+ w" }) P5 V+ M& P
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In$ i$ g8 C! d7 |8 T, G' y
August, we said a credit shutdown was unlikely – we continue to hold that view.4 I/ m# O- b% P, p0 L
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension- [' v# j+ N. r6 B
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
# X. z8 X) i1 X. v' R0 o8 | Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
2 B( ?6 b, x- ^% @0 XSeptember. Non-financial investment grade is the new safe haven.
* V% A6 o( w: d) l High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%/ s- \6 L. L# @/ z& }( G
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1) v+ ?+ u/ S# e. ^1 N; b5 k1 r
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have# j- F8 ^2 N+ u1 \% x
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
$ [, u g5 ?4 ~6 ICCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 L x& a3 n& ^1 }# u# V R
positive for the year-do-date, including high yield.
# h4 T# S. i# q( N* T Mortgages – There is no funding for new construction, but existing quality properties are having no trouble' r7 S d5 H# W
finding financing.
0 V: x7 Y) Q2 j Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
% ~6 r" W: c6 x' Q( O( ^- Y5 V& Fwere subsequently repriced and placed. In the fall, there will be more deals." S+ [9 n6 E" R
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 \/ h: b; n) t4 U! e% @
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were! m7 x5 u2 O* k C/ [- ?
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for! y( `9 B( u5 \& O* m9 @; h
bankruptcy, they already have debt financing in place.
+ d; w n& E6 x- E European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain4 s3 B8 _. M( x8 m9 Z9 f) v
today.
J v' s, d6 n Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ Q; g6 D8 n2 }& i9 e
emerging markets have no problem with funding. |
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