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发表于 2011-9-17 13:16
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Current situation D% A/ x' J! h2 I
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& |+ G u" `( C5 L5 z1 A4 fas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
& q; Y' t) j# [impose liquidation values.7 H& G& \; P; F, r! m( Y
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
, M4 I- J0 {7 E4 P% ^$ [August, we said a credit shutdown was unlikely – we continue to hold that view.* ~9 h) R) ^) x: V7 T8 ~' `" J
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
( g* z5 Y( ` z2 Ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: l9 ]- A: `, Z. q- h4 o8 D& x1 p# k2 }
% S% `/ e$ ~' sA look at credit markets
) E& A; W% b1 W Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
; l6 d2 v0 t$ ~) n0 hSeptember. Non-financial investment grade is the new safe haven.
; f$ B: [; _. a. V& W4 A High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%, J/ |- f' ?3 u+ c1 \; y, x$ ]
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 D7 P; B& l/ F7 ]2 U) L
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have8 r# K( S( k& J, m i) Y
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade* A+ k- C1 V# C7 z* }' D
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
* p: ^" B. s4 q/ T; P" m- Tpositive for the year-do-date, including high yield.& \# R' W- ?% }1 S
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble3 g" Y) ~0 W! f0 i, \! M1 Y
finding financing.
) E0 i! @! {4 @ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they3 O, U: @+ y0 w% O- e9 H5 g& p
were subsequently repriced and placed. In the fall, there will be more deals.$ k, h3 Q' \) M( _7 M$ w
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
9 g, |: o$ r: W+ u9 |: C; w" Dis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' r; K8 z' H1 r1 Y0 O
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
3 K; c m7 f! z: N5 Ibankruptcy, they already have debt financing in place.
. n* H6 S* n2 F Q3 F3 }& u European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, U' v: w' d/ Z$ V* k" Q2 \* x
today.
- O5 T7 ], U4 e4 Q7 R& | Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
4 Q8 s" w1 y8 o7 semerging markets have no problem with funding. |
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