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发表于 2011-9-17 13:16
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Current situation
: k8 V0 _; k4 M0 C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long O) {4 X0 M& j
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! C7 i: k9 H& F) c, ^: w+ A1 C1 V3 ?impose liquidation values.
0 c# e O( V: R! X: |) f- T In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
0 r6 W% E+ ]. @- |August, we said a credit shutdown was unlikely – we continue to hold that view.
" O0 g8 L b7 a3 V7 H/ T3 \2 R The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension( K p3 W3 t, i/ t% @
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.6 ]2 f/ ^/ t# ~" u7 t/ U& n8 l
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A look at credit markets5 G" o. c+ m8 _9 S: z
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# @ U1 w- J! D: N; {' M3 [September. Non-financial investment grade is the new safe haven.
. ~* R j R7 P5 c4 X; }* J High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
% S, @3 Q. O3 r: Rthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $11 h! p6 j2 Z7 \' {- T& y2 J% V
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have+ \9 k8 |; }5 c! m
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade8 p6 v6 R7 m0 x2 Y
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 e. L, R8 z! j/ ]5 R2 y: u* Epositive for the year-do-date, including high yield.0 q# ]6 i1 W6 T3 K4 { L' n+ D
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
) R& L. e t8 I7 r. {' xfinding financing.# n- Y( P& l( U/ H& r
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they! M, `2 m/ d0 Q9 L" t' j( B$ v& [
were subsequently repriced and placed. In the fall, there will be more deals.
+ ~; w9 r, n! K3 j) ]6 o4 }/ v( L2 L Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 \) {0 d. R1 j2 a$ j& ^
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
K2 n& a$ L. Cgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for% g& p7 O& v" W& N# Z$ N
bankruptcy, they already have debt financing in place.
9 b( b! e0 @4 I3 N5 a2 N. O European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% |' v3 C7 a8 H1 i
today.9 m/ t W7 s" _, e R
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 a0 H. O- O# q# y5 B, L1 memerging markets have no problem with funding. |
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