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发表于 2011-9-17 13:16
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Current situation
$ @3 Q% s4 k2 E9 L The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long1 {( R! g- h$ K8 h! c, U
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. E( {! Y6 L% ]3 V3 i- X+ O
impose liquidation values.
& x; l: Q }( ]+ h1 Y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
! `% J L: A; m( xAugust, we said a credit shutdown was unlikely – we continue to hold that view.
8 L, J, G7 }3 _ o8 a* `. z- v9 | The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension# \1 }4 d+ k) L o x% r) S
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
4 k$ t. L1 t9 \5 g
7 W0 g! w! ^8 o) y# V7 cA look at credit markets
9 a4 q/ ~8 c! N9 @, X+ r Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in5 q4 [# _. q& V" B0 t9 _
September. Non-financial investment grade is the new safe haven.1 K; P3 B; V! b& _3 _- l0 i0 m
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
/ o. k4 m! Z! _* j! B4 l5 X; xthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1) ^# b$ {" `0 c; ?& ^) f
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
7 _& T3 Q) X. w d+ Xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
: T7 O) P4 [5 J; t) H9 J h+ f, QCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
$ }! R1 `6 [' ^4 d6 ]8 npositive for the year-do-date, including high yield.
* [+ O9 M3 c) b/ O4 b; p Mortgages – There is no funding for new construction, but existing quality properties are having no trouble0 _. S& F% Z: T/ i9 \* Y4 F u! e
finding financing.
/ |2 e) z8 D% j: s Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they9 z& {5 I8 `$ b% _9 Z. R
were subsequently repriced and placed. In the fall, there will be more deals.* U* g8 o8 Q6 S0 A0 V/ H7 s- v
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
: w5 b& \$ X0 j1 | wis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
o3 Z/ `, J/ I/ i: tgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for# }4 A9 t+ J; U3 @2 L
bankruptcy, they already have debt financing in place.
/ p7 A a4 E, x European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
; n- s% B: A* ktoday.
+ n9 B3 m6 t8 j6 [6 S Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
, Z; D* s/ S ~/ }: Demerging markets have no problem with funding. |
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