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发表于 2011-9-17 13:16
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Current situation
& Q2 Y$ u! A4 U+ \7 _! _ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
0 E9 V8 E. J6 zas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may4 Q9 T0 R' b1 o( G
impose liquidation values.$ r! c1 w: [) S: E( d4 A. r( Q
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* w) S P* I1 d* n0 v: Q' F* fAugust, we said a credit shutdown was unlikely – we continue to hold that view.
$ ]- o( _4 I+ h! j2 ?" H( ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
; f) w9 g4 H7 P/ l& ~scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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5 i% [( |8 ?1 [/ {6 X XA look at credit markets5 |1 D4 p& B, E$ a: q: R% T; {
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
' p$ E' d0 j0 J: p$ uSeptember. Non-financial investment grade is the new safe haven.
& B/ y! T; Y9 B5 w9 }' D High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
% w1 ~: ~1 _4 Z/ t# ithen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 m \4 M9 g+ t: C' o6 g" }
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
( h, ]) r$ }, _7 M0 }access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade" G5 x: ~( h( C! d# }2 @$ L# ~
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" _7 _* v& j$ g! K6 n1 L4 cpositive for the year-do-date, including high yield./ L% J) T1 a2 K' D: k
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 q9 M6 m' {+ P9 q. U' f' efinding financing. [( e! X% X& S. b* s9 o8 I
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ m" k" ~& l; P6 W) y3 \$ `/ C/ {were subsequently repriced and placed. In the fall, there will be more deals.
0 o4 z* K+ W; g. U/ P- b Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and$ v8 ^2 k2 Q1 e9 n
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) M2 ?. g) i7 {8 s" Ggoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ d, {" y( A! \- {! O3 jbankruptcy, they already have debt financing in place.9 n- x: O% [: H5 B V7 g: h% l9 f
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, m; ~; v7 I1 l5 G4 l7 J, i
today.
7 g4 n: B4 B7 f6 C+ ^; c1 p2 ` Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in2 J* j4 v% x7 W7 L
emerging markets have no problem with funding. |
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