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发表于 2011-9-17 13:16
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Current situation
$ v& [/ ^& G% C& j. Y9 [ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: ?5 z: H1 m! _( \" z
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
* @7 C* [; U4 s: Ximpose liquidation values.- n9 y9 v. x0 @4 ]' q3 i
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In+ `9 R9 z* D" S# _. W g: _9 \% G0 W
August, we said a credit shutdown was unlikely – we continue to hold that view.0 ^- d& v7 {% Y; U6 k# w8 P
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 E e; b9 f) [" c5 Vscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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- H1 i- D+ q/ v3 |8 S F: C2 mA look at credit markets
- b) q5 Q- L2 t" M! `/ v+ r3 W Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in: T& @* Z A, N( }; m
September. Non-financial investment grade is the new safe haven.8 J; U0 Z, I7 ~$ s, A9 O- g
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
- q. i3 }$ y- S) Fthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1! r/ A1 @9 e% k/ ]+ s
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
- ?! z' O: n! l0 A v0 j {( [access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 i+ L; p+ d+ V7 S+ h5 ]7 CCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
% R" |9 v& O3 Tpositive for the year-do-date, including high yield.& w; z4 S6 G) z6 F2 ?+ _, f$ u
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble1 g `0 [6 o4 \0 K, J+ \
finding financing.
3 c# C) ~% r1 q3 _8 x6 Q7 u9 { Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they3 n( m W, R- H: g, i0 Z& S! z
were subsequently repriced and placed. In the fall, there will be more deals.
5 u# Y5 T. J! x; G* k" i+ v9 V1 b3 | Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and% h; g! z& t* u1 W- l
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% H5 L8 T+ T5 s% K* K ~) `# Tgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 `) Q9 N! m, k2 b; N' |
bankruptcy, they already have debt financing in place.% }( G2 w! I% X$ B/ Z0 n
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain* f" a/ u- Q0 z6 [
today.
% @/ A8 @, A4 Z& A2 p Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
} V( h2 Q; T. o/ _& y. Nemerging markets have no problem with funding. |
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