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发表于 2011-9-17 13:16
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Current situation
3 a' H2 E# E; }' \3 Y2 G' T" K The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long9 A/ X4 A1 L0 k4 J
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. I- L) g7 I: o" R+ O3 {
impose liquidation values.: S0 h: {3 v% o9 _1 {$ j4 I
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In$ }- P/ A2 W5 p) `5 E* H) Y
August, we said a credit shutdown was unlikely – we continue to hold that view.
; t$ Z1 E& `+ s/ k- k9 ` The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension9 o" Q& Z" d$ }4 `) g" h. f
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.2 v: l) Q. |! n" G* |
: z( J& K5 P. E/ j4 cA look at credit markets
% B+ W/ w/ w+ @3 K Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in5 c5 v3 k/ j( t( j
September. Non-financial investment grade is the new safe haven.
6 f! Z' a2 w8 `* B: U+ b+ i High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
8 c- v+ y/ s0 e) pthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
* e, C+ X2 O2 D- D2 C2 p) |# A! Fbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
9 L6 l# H" ?+ Z' q! i; Xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
% ?! S# j: o4 LCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# x2 V3 p6 N# Q9 w1 D3 A' }( e
positive for the year-do-date, including high yield.
* e3 k( U. q# ]- b, z- z% l Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ \1 f9 [$ } g$ p U9 Q( `finding financing.
+ G# M" L/ K! e9 R" @+ t Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they. k d6 |- x( e: D& h/ z8 T6 T
were subsequently repriced and placed. In the fall, there will be more deals.
9 ~! u# K7 A* K" ~! Q; H; x Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and8 c# X. z, t! d* u5 I1 e0 R8 }
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were: s2 a2 x T( w# Z' n
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
& k0 y( x: t1 d" j; @8 nbankruptcy, they already have debt financing in place. c9 C; ~* }0 R+ N/ |, Y
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
/ f2 X0 [5 _6 v( C4 a6 d* ?today.% S) f/ Y6 d1 h; t) u3 B# B% z
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
% G% r* G& Y# \7 S7 ]9 M+ ?emerging markets have no problem with funding. |
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