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发表于 2011-9-17 13:16
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Current situation
7 M1 o% c; L; | X" e# w: L) e o The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 d0 z7 `) C# Y, y. g1 has funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ }5 p5 z1 y( G; g" E6 timpose liquidation values.& i& X9 X7 x3 C, D2 [8 J/ s2 h
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In/ Z- F+ J+ h/ y' g' h- p Y
August, we said a credit shutdown was unlikely – we continue to hold that view.
; o* S9 n$ G1 g' A; M! ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 B6 M' V: y3 H8 {scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
7 J2 H. i* T3 Z, M7 [+ S. u0 {/ H2 m- @. K
A look at credit markets
1 A) P i4 E, Z; B Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
! \! \% Z( Y! P F0 g. jSeptember. Non-financial investment grade is the new safe haven. w' B7 S+ O( p5 p
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
3 q, ?5 d% p# E9 cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 Q' G" i8 o5 F- T7 e5 C
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
1 O/ X7 `4 k" G+ q7 @6 ~9 f0 Aaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
, s6 |1 Y( E6 z8 x+ U6 `CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; F Q2 D+ @& a5 lpositive for the year-do-date, including high yield./ j1 D- @* x' ?0 J) \6 C
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble/ q) x( b$ i: J
finding financing.* { m) ~! R+ c. } d0 {
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they3 o% c' D- z7 v1 ]% N
were subsequently repriced and placed. In the fall, there will be more deals.
& w2 g0 u8 @4 Z+ E! O2 \; S. i( r8 L Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
5 u0 H. }$ Z) H4 ?; {8 jis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
, N0 D: e" Y" O4 Q+ Q0 {, \going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
) ^' Z+ l& D, Y) q+ A8 f3 Rbankruptcy, they already have debt financing in place.
1 }" a V+ o1 ^6 F European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain+ X. T9 @7 J0 q' e* k+ e
today.
, x' `; S4 j' r- _/ I Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" N9 e& |$ W% G7 L7 E( q& @
emerging markets have no problem with funding. |
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