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发表于 2011-9-17 13:16
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Current situation
5 x1 n/ s2 y& @2 H5 S: c. t0 V# \ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long j( ]( D" M) y
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
\( \* c9 L; ]& z5 C% yimpose liquidation values.
" n% z/ r V' w In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 T8 @6 i7 s& U% _
August, we said a credit shutdown was unlikely – we continue to hold that view.) E5 q0 B4 j+ ~' A
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
, t7 H8 u9 O+ bscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: J- H6 ~2 j, B' X
: L7 `# L! G6 q$ F" t& @% ?- K5 x- }A look at credit markets
% F& W) d! K* `. O" G6 \ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- J' i f' O1 K, i: E. c
September. Non-financial investment grade is the new safe haven.
. `/ B. G1 v1 L: k) q3 l& @& n+ p9 o High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! Z/ }7 ^3 }' `& c6 i' @
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
) _: i6 m+ N9 y) Wbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
2 `- J9 y* _7 X% Jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
5 m7 X, S8 J3 w' [, N/ XCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are' M' T) A3 M( c9 H1 |/ O
positive for the year-do-date, including high yield.# c" n q* O v9 Y' b7 j
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
* J3 Q: |( m5 N! A0 Ffinding financing.
4 q \; ]+ D% H Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. u/ e4 j; @9 f v7 O3 Kwere subsequently repriced and placed. In the fall, there will be more deals.# h3 n' i& @# j8 k4 u$ a
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* s$ ^4 ~" b2 y5 e; ^ w( R& L2 |is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were; l4 @" N$ F; e1 m$ {
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
! |3 D: L8 B. J, {) g: y/ `/ h& hbankruptcy, they already have debt financing in place.' J+ o4 @7 ], g3 s4 Y( \
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
. ?, R5 d: ^+ t+ p- ~# M3 |today.
7 ]1 W e# b5 f Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& u1 ]& ^: t. U7 Z; uemerging markets have no problem with funding. |
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