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发表于 2011-9-17 13:16
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Current situation
( m9 B9 r1 O% P The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
7 P8 k4 R, _. z$ V3 las funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. b6 G/ l+ H& c3 g! @. ?impose liquidation values.
* ?5 z2 V* g6 W3 M6 ~ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
& |/ z1 M* m3 D3 T1 JAugust, we said a credit shutdown was unlikely – we continue to hold that view.) P+ g9 g: g& i0 g
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 M( U1 e- S3 C7 jscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! m& J+ Y A6 v8 c7 h# Q
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A look at credit markets: {7 m+ F: G4 u& Q0 W
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: @6 P: T( M. U' l0 kSeptember. Non-financial investment grade is the new safe haven.
: ^0 x/ t$ o8 A High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 q, [8 t6 N. l, h9 _
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $15 f" [5 L% C! ?2 V, X& r1 v8 J
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have$ K, \. [8 q4 B/ \
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) R& e2 a% ^) {7 ]! m
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are+ y7 `3 Y, m$ T6 t
positive for the year-do-date, including high yield.+ @; L" P# E2 u
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble& w& `3 M$ z$ n( ]: h
finding financing.' O" c5 `" t7 Z% `' v
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they* ]0 H v" g2 l [
were subsequently repriced and placed. In the fall, there will be more deals.
* Q5 y' K0 j! Q Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
; T( g% t% @: n) J7 @& e: Ois now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
1 H7 ?0 E) U" G) zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for1 e4 x* t' R( e3 j" K/ I, e
bankruptcy, they already have debt financing in place.* U, L* T0 S0 r; K/ T8 m
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% F! n0 S1 H6 b5 @; k6 |
today.
- m: I- Q) m% u3 a/ T Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 h2 M2 ?. B! T. x1 Xemerging markets have no problem with funding. |
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