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发表于 2011-9-17 13:16
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Current situation
' i3 z/ ^; i0 Y+ L7 T. B" r7 J5 s. k The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
4 c6 x' E4 h: U1 tas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
: L, M j6 K2 T Aimpose liquidation values.
: O8 n E4 C% b In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
' l6 Z/ B. H; p- qAugust, we said a credit shutdown was unlikely – we continue to hold that view.) n8 ^" n* C1 W; F* |. s
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension5 O* B& a T# {( B: N# M
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.3 }" w3 O+ [7 P/ g
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A look at credit markets
2 \9 c( j2 u, U/ N; t0 Q* k Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 K6 X- K" E/ f) z) [
September. Non-financial investment grade is the new safe haven.. j" ~- x' g0 X$ e1 G' H
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
1 @/ D! G2 u! z5 M0 c6 } s ~then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1% @- ?4 z" G# P5 l) k
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
) b& L* d+ d, c% M, Saccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
1 {0 b Z9 K+ U- vCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are3 u5 Y' B9 t1 U d9 N
positive for the year-do-date, including high yield.. I2 I& K8 G" b- V7 E; D
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble7 l4 _+ F4 c1 s+ ^
finding financing.
5 _/ s7 J2 q' m2 p Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
4 k1 }) F9 Q3 e/ C5 rwere subsequently repriced and placed. In the fall, there will be more deals.
; {) O' t7 A' Z Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
. Z+ N9 H3 T' `+ z& i W: t- _2 Uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were ]) N) m& g6 }* J
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
Y- Q) D `( t* w, C5 |* @bankruptcy, they already have debt financing in place.
+ m* X d9 H" `1 l European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain: t, h; J4 X6 ]. z$ U
today.
' k8 O, E: i, b- G6 Q5 n Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 k; L: v) s. G6 _3 i2 d3 j2 Uemerging markets have no problem with funding. |
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