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发表于 2011-9-17 13:16
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Current situation
. D5 {3 [/ e( A% T. f' R' { The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
* Z8 P r; M0 P1 cas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
- m4 ]; R. I# x3 g- Qimpose liquidation values.% ?8 D/ p) [- |$ M5 G
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In# `, t8 Y, Q6 Q l
August, we said a credit shutdown was unlikely – we continue to hold that view.. [0 F; {* m r
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 F, D& y( q4 B& F6 z5 h D4 h
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: G/ t5 u N1 Z/ j7 K
- v, y3 s O& D: bA look at credit markets" p" D! U( o2 ]
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in& e0 o/ e* e, {
September. Non-financial investment grade is the new safe haven.1 g' D k6 U1 ^- \4 j) ~
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' J/ ~1 d1 G1 }; w
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 [8 ?( |- d0 y6 `: Bbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have% V4 B. |1 w7 J$ s, ~% N
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! t) x- I: P. z
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are( b( M" d+ K5 T1 e; l, k- T
positive for the year-do-date, including high yield.5 K5 Q- v% U. \6 s3 e! Z; e1 |: [
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
5 H& n' X& |* ]9 \finding financing.
4 a5 g$ W6 N: {: n. I Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
) W; F; m" W5 z/ Q) l0 Iwere subsequently repriced and placed. In the fall, there will be more deals.
- a) V3 E0 E2 b: d7 Y0 _+ a Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
5 [! H5 j5 h E% u+ K: }* Sis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 F1 Q! C' j$ C* igoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' `9 D2 L, L0 Q: M# Z- v+ {6 V) c
bankruptcy, they already have debt financing in place.
* P. O$ p1 M- ?7 g European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
' @& M- Y0 x0 p8 Z6 r2 itoday.6 X! h4 _. ?; @ T
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
0 d6 u% V9 A6 ]' Pemerging markets have no problem with funding. |
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