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发表于 2011-9-17 13:16
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Current situation, w" |" ?6 C& c5 d
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& M( B8 B( `- z$ H$ N2 O6 z
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may; A5 c( p/ I+ `: m
impose liquidation values.8 V- T2 z8 P5 \. l6 @7 a! |
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In. I; K' e+ |$ E5 G" T
August, we said a credit shutdown was unlikely – we continue to hold that view.
9 T4 k4 u, ~$ v# J, d. X The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. r5 l/ l$ l( }2 j# Ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
9 J% r% Q+ V! ]7 j* p Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
( C6 [ b- f& M( Z; o2 h) mSeptember. Non-financial investment grade is the new safe haven.
' P8 w* r5 A' M2 @/ e. i# {* G4 U: x High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 w8 d4 x' z0 i- {! q7 X0 c
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
2 P- a- n( `' `7 F. k" ubillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
1 `: b- r- }% f0 ^( U; m7 zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
/ O- U3 R: U& O9 F1 ]CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# G5 }8 K8 C Z F2 \9 o
positive for the year-do-date, including high yield.) ?8 w$ E1 t0 b8 P9 O9 o
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble+ k8 V" H: N2 p' J M$ ?- n: P
finding financing.
" y+ \$ V0 J6 X) R) d& C Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
! ]( P+ L& s. E, ]3 u5 W9 a( ^& q5 ~1 gwere subsequently repriced and placed. In the fall, there will be more deals.
- ~0 x( H$ z3 ^0 q% M, l Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* G2 \1 M; S% t. C
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
6 s2 z. L0 u; a/ _1 ?: i( Bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
6 m) J2 b6 b& ]% \bankruptcy, they already have debt financing in place.& v& \7 D: V) X" A! i+ I8 }3 g4 N
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
A" I2 ^' H5 y& gtoday.. g. u2 K$ ?5 c
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
8 D8 z2 c; F8 G; n" p5 xemerging markets have no problem with funding. |
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