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发表于 2011-9-17 13:16
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Current situation
- ?& B1 b# e7 Q/ R0 ~4 L The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long9 l; ]7 w$ W7 r A
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# h; L/ M# A8 X; Q$ cimpose liquidation values.
8 [" n: m) t' h: I# z In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In% W# r% d/ l6 n6 X' m, T
August, we said a credit shutdown was unlikely – we continue to hold that view.; {3 `4 Q# m* S5 c! {* \
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 e+ S1 a. x1 V( i4 y0 Bscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.2 y5 z: r8 b' H! Y7 y6 B' T
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A look at credit markets
6 q3 H! N) P2 M: i4 H2 \. a Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in9 b& D" n/ c7 Q6 e( B1 [9 M1 ?. X. U6 K
September. Non-financial investment grade is the new safe haven.5 w1 j8 M4 q$ D) r
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 n) H; D: d5 ]) B# d
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: m1 l' F+ v4 l+ a
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
2 U+ U) a$ ^. z( k# Kaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 v! z* p l& M) J' H
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# t) {7 i8 G" t& U- X
positive for the year-do-date, including high yield.8 t/ a0 q6 P" P' w, ~! Q) t
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
7 p7 d' e4 y# A U* w) y% Z1 Z& vfinding financing.
, z9 u% \8 d& L. D Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 _* H# v1 V6 `- ^" ~% \, u% Ewere subsequently repriced and placed. In the fall, there will be more deals.
7 h8 S. O0 c/ l) v5 C Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and1 ^1 b" ]& ]. n, W u+ ^
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
6 U8 F c# W) o6 Hgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
' h/ ^4 t8 d% R u4 l1 ?bankruptcy, they already have debt financing in place.2 L7 i! e4 P* @$ i( H" ~2 J' L, L
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
M) H8 k3 d0 T& ctoday.
9 e( Z# ]) @$ p7 I4 z Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in! e9 e: q0 s3 F% Y' }% Z
emerging markets have no problem with funding. |
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