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发表于 2011-9-17 13:16
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Current situation
0 J2 Q$ U2 n3 U( ? The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
. D X- L1 q/ G) l2 m* vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 N; Q n0 r- j) u0 _: x% [
impose liquidation values.
2 x: J' }9 n' H In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
0 U+ X. L: ]; ]' WAugust, we said a credit shutdown was unlikely – we continue to hold that view.
3 J, \! N! p* U9 e# l) v, d The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
) Q7 z! } s# f# w0 ]scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
9 y0 `- Z' ~( [: U; p$ C$ _ A! s0 F4 G9 Z9 w* n& s* K9 I+ K
A look at credit markets8 i9 f: M: [4 ^- T& R# ]
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in" X9 G3 _9 p) Y% M. Z& h8 _- k
September. Non-financial investment grade is the new safe haven.
; {# X+ `( J. n0 N, o High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 s. g* I: ]! q! [& Z; D
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1( ]/ r {* G3 k5 g; p
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
) X. w9 R' s5 E3 T& daccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
3 C0 g7 B8 x( n- ^ ~6 J+ L; n# n) ^4 m; aCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; J* r" ]1 p6 I& B# _positive for the year-do-date, including high yield.
) ^' a! i4 q; e Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
1 a# @8 S7 d# Yfinding financing.6 `' G* b+ e6 Y9 G6 M2 K) S3 g
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they1 f; O; W2 \/ @7 r: z$ }% N7 w5 x
were subsequently repriced and placed. In the fall, there will be more deals. p" x8 e# G9 S+ p; u* h6 ^
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and( v5 ]" }/ D$ k/ C* [5 |9 w
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
9 j! z% \/ u5 l" q @going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
" h+ {/ o. {+ ^* g; A8 R3 P/ Ubankruptcy, they already have debt financing in place.
0 z# |9 g0 V) D1 {$ e" P* b% q# [ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
- p; U' n) U7 z' Atoday.4 Z) D/ @& m- O9 }4 v3 V! Y8 ]9 ]
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in; l6 \- _$ C+ ?- Y
emerging markets have no problem with funding. |
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