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发表于 2011-9-17 13:16
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Current situation
& J0 A7 \2 ]0 o& S9 l- a i The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
8 e7 p! h" ?7 f8 Y( vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# \3 J: @, N, [" Z$ n. Kimpose liquidation values.
& ~& ]8 P# N1 |) X- u7 i& u, {; Y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# [- P( `) P3 U5 x4 a5 k* ]7 pAugust, we said a credit shutdown was unlikely – we continue to hold that view.# s$ |- T1 h! l9 K) F. @5 ~
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension- Z; d1 ^- V& z5 ~; i1 a
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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$ e) e/ ]& K2 D! }4 KA look at credit markets
+ I2 x' ^% X1 j" ]- J# n+ F; } Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in& a6 l% a( g( F' W! |0 \
September. Non-financial investment grade is the new safe haven.$ i: o) O. F% e' R' k
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! @9 i; b" c" l2 l! S$ o
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
6 [- F6 p3 I( G0 V* wbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
2 m- l0 h1 M7 x. j- @access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
2 g$ ?4 N3 H1 M0 G8 S6 b4 `9 o9 GCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. E! q) @- C6 z; z% Q2 f1 K
positive for the year-do-date, including high yield.- h" h! @! @' }9 y2 n
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble' B8 }: p" J3 s; J. S0 Z
finding financing.$ \7 v( o. o5 w
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% L; W( `, L; f2 N# W) L# K+ b+ b
were subsequently repriced and placed. In the fall, there will be more deals.% Y5 d% w9 G) Z6 n" \3 t9 s
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
% l2 ?: ~: G+ n6 k" b7 xis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 f0 P, W/ S5 D5 U" `
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for# Y A0 o" ^) ^& L6 _1 O/ Y
bankruptcy, they already have debt financing in place.+ N- k8 ~+ e2 ]2 ?- Q8 G7 k6 A
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain3 R" B( b q W! c4 r
today.8 |7 B/ b6 @! Q& t! x3 t3 D% z" m
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- z7 e) X* o) W2 C8 W$ G
emerging markets have no problem with funding. |
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