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发表于 2011-9-17 13:16
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Current situation
# ^' Q4 M6 R" g& o% T The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long+ D8 j) L. g# i
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may; p- d% H* m, [: i
impose liquidation values.
' G- W0 d, D( x, `$ H In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In( Z; K: j# p2 k! g! y( C- m& C
August, we said a credit shutdown was unlikely – we continue to hold that view.& m; M4 l Q! T3 H9 j0 C: r: e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
8 j4 p; J% m6 b0 M7 V4 B2 ` {scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.2 C8 R' L7 K# E+ J
2 o8 t! n8 U( f6 dA look at credit markets
% a3 a5 N ~% b( v Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
4 L- Q, }7 W) K2 W8 rSeptember. Non-financial investment grade is the new safe haven.
# b8 L7 K1 [ | High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
. t( x" u$ L' X$ J; `* s- Ethen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 g0 p% r8 q% f
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 j( I- ^1 e8 C2 ^: A- Haccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; E! j1 \$ K3 ?" lCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; }! U+ [$ E& ]- W2 vpositive for the year-do-date, including high yield.
2 v* N d. ]0 Q# n Mortgages – There is no funding for new construction, but existing quality properties are having no trouble3 S3 o5 _4 e W0 t# x
finding financing.
% T7 c& G: }& q Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they' I7 t7 F5 Y& E. x
were subsequently repriced and placed. In the fall, there will be more deals.8 G ?" R' _ I# P- l
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, j" C% [+ g" i( _7 I# B8 _is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) D5 K8 d- T( ^$ Bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" l& e; m. l7 v8 C9 V; g
bankruptcy, they already have debt financing in place." ^5 X. e' a) C9 S7 M2 k% z* L
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain; L. f1 J G3 F* ` u0 B
today.
! ? f! y+ P$ Q& V' o/ ] Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" }' E1 R! w6 H3 q! Z
emerging markets have no problem with funding. |
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