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发表于 2011-9-17 13:16
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Current situation
# ?9 c1 X9 }* W3 b* E f The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ H" I4 N7 F3 P# l6 i
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
* x; i; U) W6 N9 P7 d& Bimpose liquidation values.& g8 _9 x! ~: N0 s
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In* Q8 [0 b }; D& M% X" _2 j
August, we said a credit shutdown was unlikely – we continue to hold that view.
0 | B3 Z& O" [0 i1 C" o The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 A/ B+ s/ L6 U0 k
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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7 S; \8 f% H/ _ A3 l3 V, {A look at credit markets+ ^" {8 \1 N/ T; ]
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
u: t7 t$ D2 ?9 l8 u) gSeptember. Non-financial investment grade is the new safe haven." B0 y% U# n8 j6 A5 S1 w3 L
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
4 Q, w, ]; Y( l( X1 j) R" b- Rthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $10 @2 }7 c# ~ c' p; z* E3 r8 C$ x- V
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have. W; O6 L6 _' n4 j1 R" b2 P; ^
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade' z! }5 e, X$ G% b
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
$ D5 i8 V) t% J9 tpositive for the year-do-date, including high yield.
0 I( ~& }5 W# x' Z/ ` Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: D- i0 ^2 N6 B7 ^% }- ]finding financing.& J( g; l; V6 G i
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they. S, P- ~; g' j
were subsequently repriced and placed. In the fall, there will be more deals.$ \8 l4 ]; O N8 m
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
" c" i" R1 U7 }6 A; b: t* C' y* n# f- B! Yis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. W# \1 n+ k9 z3 V7 bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& l& b# J# \4 [; N7 l+ K: h
bankruptcy, they already have debt financing in place.7 S3 j4 h- i6 }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain( c% b* n, x5 X/ t6 Y% F
today./ S% w! n3 I" J) c+ W
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' T2 F: o# F& c4 o: N2 H7 bemerging markets have no problem with funding. |
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