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发表于 2011-9-17 13:16
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Current situation; B$ S; s6 Q5 C& w0 y( O
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 F8 T$ R t( g$ w$ }as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* R+ c2 _& @3 q
impose liquidation values./ L8 Z5 c7 N( S" d9 H2 T/ P: Y0 x3 i
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
" p7 E" @- r' G/ \4 AAugust, we said a credit shutdown was unlikely – we continue to hold that view.
, G' {' Q9 m4 D; a The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension" p3 n& j k- y% x0 w
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
g) u2 F4 t* M' M+ Y1 }! q Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in" a8 e6 C+ D! [2 X! {% @3 |
September. Non-financial investment grade is the new safe haven.' g- w( Y. Y, z' p8 G
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! n& d1 e D" Q: i0 U9 ^then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
# {! c- @, U; Z# q6 x9 p+ K, }+ I' ibillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* a( S. P6 v$ maccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
" y Q. E. O4 G. C9 T, U. VCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
/ y9 ?8 y6 E' ?2 o" ?$ K# C& a0 Qpositive for the year-do-date, including high yield.
+ w, E; k* i# q# W( _) O Mortgages – There is no funding for new construction, but existing quality properties are having no trouble% d: u, D5 x! ?; k
finding financing.7 Z: C& Z9 g% \" ?$ {! f' V7 ~: e
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they$ ]- l" o1 Q+ U5 [ ?
were subsequently repriced and placed. In the fall, there will be more deals.
; G5 q# D% v- I! Z7 [ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
7 i6 M! i$ j! e, s; o9 ris now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. w7 O/ f* d+ ^1 ?* S: l" fgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' K# l. W5 c( G/ I+ C* R
bankruptcy, they already have debt financing in place.
6 I! [3 s' p( }- h& o European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
) ]' p0 S6 u3 Y0 d. _3 rtoday. h# Q/ p0 k$ k+ Y- s/ k1 @; U% N
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in( }3 r1 `* h; Y0 I. Z! H
emerging markets have no problem with funding. |
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