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发表于 2011-9-17 13:16
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Current situation
* D/ f3 v, N$ T! |% G The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 r# V3 Q5 a/ [9 f1 ^7 i' _as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
0 l5 A5 M: Z* R( ?- T. C; vimpose liquidation values.) t9 T# @. s, N; T+ G: a* k1 N
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
9 u2 J9 a9 |' z ^0 ]August, we said a credit shutdown was unlikely – we continue to hold that view.
3 G! H5 I. D4 U The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 y; n7 q6 @2 {& c
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.% p: v$ ?7 w0 g( o& ~- L: [
* Z+ u7 [) P: T5 J: AA look at credit markets p5 D' N0 ?" c5 I* J8 y% M0 c* ?
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- F2 S) N7 A8 y ~: ~September. Non-financial investment grade is the new safe haven.) |4 B7 ]( w! I/ l
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%. [+ g4 I( F+ g9 c
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
+ n; h7 j/ t7 @* @billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 L) O2 G9 T4 N* m. D1 a# haccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ [( n/ x7 o5 ]* g% P
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are% E& F" x" s+ O
positive for the year-do-date, including high yield. F& _0 J+ y& R( Z# i6 N% w
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble! Q( K# R2 L7 ^3 n$ A/ X
finding financing.- A9 k1 H3 x" P# v; f
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 S4 h8 R F) v+ I& r' _; r a
were subsequently repriced and placed. In the fall, there will be more deals.6 J$ e# `2 u2 v, O% R! P% [; L. O# P
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and. _( x4 z7 w, f) d
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
: l9 A2 J- w+ H& ^going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 X+ f. S' J) ^ k
bankruptcy, they already have debt financing in place.* k8 G+ Z2 L! ?8 B* [0 @# p6 }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain. e2 D9 U# ]6 D
today.
# X0 p% ?# ^7 `8 Y) T, Q Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
% m! z' x8 ~$ z- cemerging markets have no problem with funding. |
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