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发表于 2011-9-17 13:16
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Current situation
* N3 ~' o. `2 Q( }( i' A; d5 H, b The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
+ C @5 w3 j3 ]- n" Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! h) R. z6 k) d. z: O# Qimpose liquidation values.
8 \) W& H3 @3 e/ ] In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
l8 n1 G: P, bAugust, we said a credit shutdown was unlikely – we continue to hold that view.
. ^& f' X L! u9 Y& U( ?# R ^ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 C: [8 Q0 c! n3 q8 n# e4 z& t( oscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
2 D% V; H3 t: {2 F6 P9 Y& E5 E1 p5 y) [! a! u' a0 Y
A look at credit markets
8 a6 \7 G6 W9 n1 R+ M, t. v Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 q6 _% X% L0 K( C6 GSeptember. Non-financial investment grade is the new safe haven.
5 ~! C T2 s- v' a6 q0 V High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%) d3 P& N9 J3 \
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; O5 O# \+ n3 Sbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' O- m* @- e: F) U. N6 i" Eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade% |& s7 z# ? u r
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
+ i* j- w# |. ]4 C& [& M* ?- Bpositive for the year-do-date, including high yield.+ e7 p5 @2 T$ m! Q- O
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
4 J: P4 Z/ F3 x! U7 U" u5 F$ Qfinding financing.
" N8 _, v) O8 l% k& R Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they8 B# \8 Y- E1 ~3 p
were subsequently repriced and placed. In the fall, there will be more deals.
% F8 K# t- _" `% L- t6 X Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
) @* @3 b5 }; W l x6 O2 J- qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were" J; L& X! }1 |. D$ ]. K1 K
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ e! Z7 s0 M* c) n1 ?bankruptcy, they already have debt financing in place.
0 y6 W) c3 v5 }7 O$ D European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain& `0 G" O* S0 F+ K6 B3 |* [- s
today.
6 C; A% o. Q! P/ U F& F Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
" L5 P! Y. V- K- E: Uemerging markets have no problem with funding. |
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