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发表于 2011-9-17 13:16
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Current situation
" V2 C3 w$ ?7 o U0 w The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long/ L) G% \8 s w0 @4 l \+ o
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may0 y# o- H9 k( W1 g% X/ A
impose liquidation values.5 _) |! M1 p3 L5 w, G
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In& D& j0 J* j* N9 x/ F0 d
August, we said a credit shutdown was unlikely – we continue to hold that view.
8 C) k- h4 C" H3 D9 p8 P The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
+ N; R% Z# _8 h$ dscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: y6 K( n( _7 {( ?
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A look at credit markets
8 O( [) _7 A% L n( E f Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in& H c3 u1 A- B# D
September. Non-financial investment grade is the new safe haven.( D1 h5 m B$ P( v4 b- H8 S J7 k
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
3 h. t+ c# j8 Wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1! l- x! U9 p0 p/ |; f, Y% N
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! U% n, u3 t! n& K9 M) n/ {( |# \
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# p& N# C; b) D- i# v8 ]% u; D
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
$ V# G- i8 V; R( Y/ Cpositive for the year-do-date, including high yield.' _' G, K1 b1 \3 R: u% ~" }
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
3 _) ~5 V" s7 {2 R% Z6 jfinding financing.
! o0 _* a4 X5 M* u ~2 x. n7 b Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they4 H; S( R- ]/ ?+ x4 s
were subsequently repriced and placed. In the fall, there will be more deals.5 c9 o0 R7 p' ?, R
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and/ }- j- ^8 a0 P7 b/ L; x, F
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
2 ]1 \) B) @8 S* O4 tgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' R `# ~; E5 a: M
bankruptcy, they already have debt financing in place.# v; T* G5 P7 t6 B' ?
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
1 H* Z: b1 c1 G1 v S6 u( Wtoday.
6 v; J7 Q k a( d$ k( Z( v Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# G: S* P: _( @9 m7 m" ?4 ^
emerging markets have no problem with funding. |
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