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发表于 2011-9-17 13:16
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Current situation
1 s+ P. [% R6 U/ r The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, b6 }! S1 A" G' C
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may) y. c9 P& m9 R# ?' u7 b& N
impose liquidation values.) y& r# \' j) v6 z
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In, g* W3 t& q a6 u8 m3 p
August, we said a credit shutdown was unlikely – we continue to hold that view.: L, E2 h! T" w) @/ ?, ^
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; z9 q# J6 k& m; C
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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# o3 s# j* E9 r! Q2 e2 MA look at credit markets" i- e" _3 p- c( e4 ~$ i6 ~
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 ~" b- B/ y( L( d
September. Non-financial investment grade is the new safe haven.) \4 r8 \' H1 A' r1 a/ x: w9 h+ D7 o
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%+ [& {9 v' i7 y8 ~ m3 k1 N5 J
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
: H3 o/ E! Y; y2 }2 ibillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
4 c9 e% I$ c9 J+ R$ S2 raccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! U% m# E3 Y4 M4 h7 S' n; G
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are% ?0 n# Z( i6 U% b% E7 x8 @
positive for the year-do-date, including high yield.0 V: r3 Y$ Y) Q
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
! \% J: c1 l# ?! _2 }, v5 ]' F- Ufinding financing., V% U3 u, L$ P" r; H
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they: k6 h' m# B {% l% r
were subsequently repriced and placed. In the fall, there will be more deals.# n* R9 E% o# b( q
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! q1 ]- Z$ E7 a: ~1 L8 g
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# }8 g8 Q5 ^- q% ~& e8 _
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for8 _2 j1 O4 w: H" s1 c2 \3 e5 w& A% [% n
bankruptcy, they already have debt financing in place.8 m( V+ k+ T4 v. d
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
0 W T7 h3 r, { s0 u2 |0 }' }today.# B. v7 L* M- C. T2 o S
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in6 d9 t( Y u; r7 O. O
emerging markets have no problem with funding. |
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