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发表于 2011-9-17 13:16
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Current situation
6 q6 G! k* b- m% w+ s& S The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
* }4 x7 O9 W, U8 Aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
6 z" ]- ^) U3 k& I& ]% mimpose liquidation values.
6 q2 E W. v6 g$ m1 P5 B In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
. Q2 k# F H* r1 @; \* GAugust, we said a credit shutdown was unlikely – we continue to hold that view.+ H. A. W6 }4 a4 Q
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
7 q7 [' `& c/ ?scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets# I* Z: [0 y- H6 V
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& h) ?3 B. E. rSeptember. Non-financial investment grade is the new safe haven.. |9 W( ^6 I7 G, ?
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' e8 h1 G* U. d* t' W' g2 k
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1% e/ ]$ V. o2 b; u9 j: G
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
3 w6 L1 G+ N" i- S7 T2 F- {, M5 ?3 xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade4 I! t' \% j2 V3 m# B0 P2 a: \$ W
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are% r& F! R' B3 s
positive for the year-do-date, including high yield.
8 m# R, D2 K& W: E! \: P" \ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble( p: ^6 y# Q- I2 p: Y& B
finding financing.
. R. N( Z/ R" ]! r Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. I$ e; j P6 I# ^, x8 w2 l2 @were subsequently repriced and placed. In the fall, there will be more deals.
1 i7 N. V) U. A* w" s1 [0 T a( q Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
3 @. P8 P- i! N0 V% j% G2 gis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
7 z3 e8 _$ O! P% x( _going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
% Y" \/ l( H0 x7 `6 q# Ebankruptcy, they already have debt financing in place.( \- o' Z* L, W: O' S+ f) j
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
' d$ y# B+ e$ C8 L% I; z# Gtoday.
; {, E; g% c3 Y3 V A Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in5 o7 @6 s* \. b, r; C
emerging markets have no problem with funding. |
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