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发表于 2011-9-17 13:16
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Current situation
1 I! K3 U, l( w. b( ^/ n* Z! T The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long; |- F( P! z$ Z8 m* t) y
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
( F7 T: N) J' c+ r2 fimpose liquidation values.: }. V' P; m2 X: w
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 ^! ~0 I- @$ r6 g
August, we said a credit shutdown was unlikely – we continue to hold that view.: I8 x8 }# {3 E2 P
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
; i) j% ]6 P& I$ H' r3 Kscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.. |7 i: Y( \1 X( a, x! J$ L
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A look at credit markets
$ s4 v; N1 E9 H/ W& n Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in. e5 Y2 G3 A4 q0 j1 q$ g1 f
September. Non-financial investment grade is the new safe haven.* a3 z F3 [6 Z7 D8 j$ v
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
, r' m q- q( mthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
d0 q" T6 H% S, z8 Q) L- i0 O- ~: ~. ^billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
7 b- p k& p4 K& {/ zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade3 H# s; q+ U6 [3 F- M2 m
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are+ A% `; a! F# t: z- x
positive for the year-do-date, including high yield.
$ E% P/ l) K# w- f: R# V/ O Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' ^. v' f# Y$ y9 e7 z) N7 X0 Dfinding financing.) a* k V8 K; D4 S
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they f0 f8 t/ j8 `+ v
were subsequently repriced and placed. In the fall, there will be more deals.* x+ W' I, p$ c% p$ f8 N
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
) Q/ z4 ^9 W6 L( _( i8 e5 Nis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were0 P- L1 ]( t) n/ }- ~- O
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for% I1 j4 b1 e1 G5 m3 u$ B$ R! m
bankruptcy, they already have debt financing in place.( Q% ]+ `, p5 i$ {- {0 a
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain) I* U+ ^6 x0 u
today.% b/ U' s" ^' J+ n7 [1 c
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in4 h5 m; ]' o6 d
emerging markets have no problem with funding. |
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