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发表于 2011-9-17 13:16
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Current situation
# s# ^. E, G2 W1 D) i* v( n7 A6 P The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: X8 A0 W7 F, J% t$ b( n- B
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
9 b( k& A. y) W1 ?, O3 d: d3 Zimpose liquidation values.4 w5 P+ d" V/ o2 W/ Y# E
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
. h" R0 h1 ^4 {0 e0 {; pAugust, we said a credit shutdown was unlikely – we continue to hold that view.- M& a4 t2 `; k V6 P
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
! p) v4 e( N- P1 a7 W& J4 S, R" Iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: \. k4 R3 F. ? E5 Z
1 z5 Q# ]1 I. K" m7 QA look at credit markets' E5 ^4 r' x( T8 u: p) Z
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in6 I0 n+ m7 Z0 {/ k+ r& D
September. Non-financial investment grade is the new safe haven.
5 Z8 U: p W! T, ^( o$ B3 k4 U3 K: g8 f" E High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
- ^* I2 a6 C l9 _then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1' H% w$ I* K% X% P4 i* c/ L, s
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( O/ c T9 c$ q
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
' I/ i1 |- I$ r- {0 VCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are3 K7 [2 Q4 ]! ]3 ?" u
positive for the year-do-date, including high yield.6 [8 S* @! T9 d: v0 s
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 A U% s0 i1 O6 |/ t3 Ofinding financing." i5 A( z; G5 o$ e" c2 y
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
* Y- N" C3 A$ n3 dwere subsequently repriced and placed. In the fall, there will be more deals.
! s1 A+ X( Z0 _7 J; `1 Z Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and8 C$ A" U- G F% [7 L0 {
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
/ R3 J( r) w. j) N0 wgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
* q% s& {$ }: a% Q7 J' L% J5 P* U0 Ebankruptcy, they already have debt financing in place.- \; J, v" R. j9 A! b1 `
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain" o/ M' h! |9 P) F
today.
& g$ v& Z: `1 ~ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 ?# J* ] o4 i0 X( C% ~4 `emerging markets have no problem with funding. |
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