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发表于 2011-9-17 13:16
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Current situation
8 M2 ~8 l- }+ r# p- G+ m2 h The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
3 o1 d* H+ S8 b2 U/ Zas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
6 J. y; n) Q6 D- V" \& Z9 Pimpose liquidation values.
/ l; {- I4 s# W; K In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 x( V) |- H5 C+ g. _. rAugust, we said a credit shutdown was unlikely – we continue to hold that view.
' t: s9 K& t7 b; B" d5 l/ x. T( L2 j The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
' h$ X, f9 a; s) h! U" S/ N* B6 Cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets; k/ H+ v# U* ~9 v
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: e1 f2 _$ e) G8 ZSeptember. Non-financial investment grade is the new safe haven.2 _8 O( Q' S- W* q" R
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
8 ~6 _$ F( {! e2 Jthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 ^/ y8 A/ l& i; g7 y$ q" j. @# F
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have% i4 B% g) n+ g: y
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade0 G' e! ]" H- i7 @
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
' \) ~+ H+ W: r, y' v7 Rpositive for the year-do-date, including high yield.# v$ ]3 a) L: \4 Q# X' d4 x
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
# y2 r& T2 g) L" g; Zfinding financing.
' N2 c' C4 K, A$ I Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 [0 j' k# `! q7 p0 T6 k; D3 T
were subsequently repriced and placed. In the fall, there will be more deals.' S! |( V/ H0 [) b- {) Y, P
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# o) K8 y' E3 Y! O( d/ B% }% G' ~
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) g. M9 o! p( o: z) {going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for4 y/ |0 k" S& [* I* u% c
bankruptcy, they already have debt financing in place.( V8 _* h6 T# O; Z
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 l- w' ?) n3 z
today.
8 f+ i8 ]. [* j. F0 N" n! A+ o- T Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
x$ d5 j$ G# o, X/ E6 cemerging markets have no problem with funding. |
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