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发表于 2011-9-17 13:16
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Current situation
. @4 S i7 i" `3 h2 ]2 @- [/ q. N The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long. z) c. L+ }5 R( a; m# G8 N
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
6 {3 D. {0 i2 V( Himpose liquidation values.
' x8 ~ B, `' r In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 [2 U: }) q# ]4 t8 j8 ?+ O
August, we said a credit shutdown was unlikely – we continue to hold that view.+ q3 }8 u1 F7 T/ h4 L( k3 I9 P+ ^: _
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 z4 d8 H; ?" b( D' L, h
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( q2 Y6 W7 X5 W# F8 ^
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A look at credit markets" X2 f3 y" `" |
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
7 c* w3 @5 c# d3 W7 p/ A, LSeptember. Non-financial investment grade is the new safe haven.
; e8 n7 n' p( F/ B- n9 {+ q* D; c High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' o; ?* } `. u) @' |* V
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1- T8 i% t3 h( G/ n+ s& w: U
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have+ d7 t/ O, J2 G! M; T2 z8 {
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade" T6 a$ h( _4 |& o
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
& y: J7 _$ T. @& M3 g1 L! ppositive for the year-do-date, including high yield.
- p9 N' Q$ u- l. s* | Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
/ W5 D. \/ W0 T! @( ]& Qfinding financing.$ F& ~* K' I7 D* Y. j
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
( E" w/ N8 I/ A" p0 e" ?. d$ mwere subsequently repriced and placed. In the fall, there will be more deals.( q9 ^1 {. e0 @
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and. k: B" H. y y4 U; |: ?# q3 B
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
4 f+ b6 g, z t+ Cgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for3 @2 h/ \1 s& {+ J# z
bankruptcy, they already have debt financing in place.3 z9 O" K M r
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain2 L5 S9 p6 C$ _9 o0 P7 `+ B. G4 O
today.( y2 T, v# I) V" [! {. R
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in& i( V2 L* I3 ]- L
emerging markets have no problem with funding. |
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