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发表于 2011-9-17 13:16
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Current situation
( |3 t* _7 y) W2 U7 K6 R The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long# }9 Q# M; I# F
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may- ~8 T0 h3 u5 [
impose liquidation values.
( o- |0 o6 U) v& q. s i! a In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In" N& {- @# Q9 \$ }+ I3 _
August, we said a credit shutdown was unlikely – we continue to hold that view.
@* T. a) H- e2 l8 r3 I8 w+ x* z The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
& q/ [* n# x0 [+ v) X9 ]- q/ O+ Wscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
}4 W& V1 v2 Q+ u% j3 } e Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
8 q3 L7 m E; }- k( \2 ]8 [4 pSeptember. Non-financial investment grade is the new safe haven.
5 C8 g& m) u* _$ x8 W, N High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
) s8 E# o# v) c. Xthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $19 O d- r5 `+ A3 ?
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have, f6 I& i8 Q: P7 t
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade0 f$ ~* O# B* E" d
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
1 I6 e$ ^/ T) @; ? [$ Qpositive for the year-do-date, including high yield.' C; V7 `3 }9 w \1 C& A: L6 x
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble, A& h$ a8 F2 e9 f; {0 q
finding financing.- ]% F7 K# f6 F" j) u) M5 F
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they w2 E% c* q q& S' f
were subsequently repriced and placed. In the fall, there will be more deals.* `+ K! j4 K" J) K
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
% t0 U8 @: |1 Tis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were% Q- G8 t. N. H# Y
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for0 h# P0 O& b' d r$ L
bankruptcy, they already have debt financing in place.
$ J) }; w9 a4 v7 [/ H0 k European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain' k' l3 m5 q& u8 f- Z1 r0 j- S2 I8 S
today.6 ?: t- n% r% ? ^$ Y" O) U
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 R3 v/ i, w, k! U& s' k! iemerging markets have no problem with funding. |
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