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发表于 2011-9-17 13:16
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Current situation. e; e9 R% q& w! M% E
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ H. f, A0 o! t/ \4 [# X6 Bas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may1 K4 A8 X$ m% `# A P
impose liquidation values.
3 [- O- i* y0 R, A. b; J V" b In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In' b7 n! g# q1 P( u- p' C1 B
August, we said a credit shutdown was unlikely – we continue to hold that view.
# q0 B* Z3 O5 s: S; x' j The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
& W$ d6 y+ A/ w9 W) f Bscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets$ ~( W! D( N7 l! X/ b* ?
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 @, |8 `9 H/ q! P- t
September. Non-financial investment grade is the new safe haven.
+ j, u- k8 {, {+ y: @0 E: O High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%, B" F! C% |9 f
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $14 W& V2 Q; A; W* l1 _
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have& G8 X- H6 f- ~, I4 D7 A7 P0 _" ~
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade3 r. c" M8 U5 _( Y1 C. s2 F
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- [. r9 r+ M" I" v) N3 epositive for the year-do-date, including high yield.3 U' ?* F" h" F% m
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble: C E! C* k, E0 b' h S
finding financing.: g8 G* H& C0 y4 i) C: P
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they9 j. s0 j# z& F& D% G9 \
were subsequently repriced and placed. In the fall, there will be more deals.
& K% }: o8 I3 { Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and1 i! o7 U: E6 N* K
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
+ D/ e' x8 d' `: S, G# s& w- d6 ^. s' Mgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 X9 e( E/ N: p. V' I
bankruptcy, they already have debt financing in place.; F& R9 i$ }/ q/ `% j, k% P
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
! g8 z) J$ [; {& xtoday.
) D( }0 e- j1 M! n Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
% K3 L( H# U) u& U' e5 Z2 b8 Bemerging markets have no problem with funding. |
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