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发表于 2011-9-17 13:16
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Current situation
& v3 L# e* a) M) R The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ A! B6 Z7 _+ q9 X
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may4 j( ^) d' u. a6 b9 d4 J8 W
impose liquidation values.; [) c( C; N, ~9 u* `1 q9 }
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 |% x2 q0 ]7 k" I' aAugust, we said a credit shutdown was unlikely – we continue to hold that view.% F4 i' Q5 k& h; E1 c6 t; s) S! h9 h
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension3 y8 b* G7 k* I& S% n
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets." I9 G6 @! @* b# J! [
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A look at credit markets
" Y. c, w, ~. p Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in" v3 t r+ W W' J% @
September. Non-financial investment grade is the new safe haven.# V- X' C& s8 h" U# \
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%. _- S% M( a% z" y! q3 s
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
- _+ v; g2 R/ K+ S pbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! k5 Z( q' |6 `" v
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade. d, P+ }, _3 n: c8 N! g# h& P
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are; ]: ]8 t9 n! b4 ]
positive for the year-do-date, including high yield.. u) z4 R) P' T7 i2 V
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
+ J7 ^3 V% ?8 u" L# }- cfinding financing.
8 _/ @" Q1 N$ b! ^* ^ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
$ r+ B0 p' j* A; \were subsequently repriced and placed. In the fall, there will be more deals.
6 q! O- g J8 d Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
3 P& `! L& U; x! o9 p% Sis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
: B2 u4 R9 r- b6 S2 w, xgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 d2 q; [- P+ r4 a( H6 [
bankruptcy, they already have debt financing in place.
N3 V8 s: u" T, H European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
+ ~( k1 ^' ?" `/ Ctoday.
- ]% d& {6 @. }( P+ x Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in z5 `4 S* C; w3 ~9 J
emerging markets have no problem with funding. |
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