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发表于 2011-9-17 13:16
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Current situation
- v' l R7 ]8 }& S( w; _1 G4 { The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
' A5 D6 W2 V9 a* d! r3 aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may' @% Y2 R6 F: v& i3 H. g# F U
impose liquidation values. N6 o$ e% T% P5 a, g) E
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In+ O1 _" A. o6 X# W
August, we said a credit shutdown was unlikely – we continue to hold that view.: p6 R( @% _' F% }
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
5 Q$ a' o( n% Z: u- h5 J8 W$ sscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.9 p6 _7 w6 J3 Y
+ L/ J: ?0 [$ V. `' E& N8 oA look at credit markets9 G/ ]- G/ T2 ^( U
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
/ R* `' d- b4 j8 {2 q$ qSeptember. Non-financial investment grade is the new safe haven." \. R8 z8 A1 p: P
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%) P3 m5 o& A$ e- w- E
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $14 p Q7 {) l: U8 Z: k
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
# w9 ?/ C8 h6 n9 zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
$ ^. G' @4 Y" E9 @2 Z5 NCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
2 L I9 o8 ]3 ~positive for the year-do-date, including high yield.
4 `# j5 W q7 N* N Mortgages – There is no funding for new construction, but existing quality properties are having no trouble6 n8 n7 C- _5 f
finding financing.
5 z9 t5 l& C8 W6 W Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
$ x" b/ Z0 P" Uwere subsequently repriced and placed. In the fall, there will be more deals.
" q; }* \" |# P Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and' ~( O8 T1 [2 Y: h+ i* I/ y2 C
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were3 \! \9 K1 X1 w; w( T
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 R& a& g, {: Z
bankruptcy, they already have debt financing in place. v" g _' j& j, i a9 N
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain* h& c# {, c2 d7 k+ V& r6 y
today.
! C6 c( ]7 O6 S Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# s* h' s1 E+ H' q3 \0 Y
emerging markets have no problem with funding. |
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