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发表于 2011-9-17 13:16
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Current situation
& F* F- x2 M+ L The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
- F: b, r+ ?* S' E( bas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may1 P' ]7 T3 c: \7 T; q& u
impose liquidation values.* u' n9 t% g: a
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In+ B h# z% W1 i
August, we said a credit shutdown was unlikely – we continue to hold that view.: `. c* A0 |$ e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
1 Z# Z: z( F& l2 }, y1 o. Dscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.' }9 k P. C, u: I* ^
. d/ [7 W) Y* `) ^+ dA look at credit markets
# \3 _: b& g1 I& d1 b! J; h4 B Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
) M4 V7 I' |* u. C! SSeptember. Non-financial investment grade is the new safe haven.
7 z: d- K4 E* ~& n9 \( I9 ?, v& d High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! A o* l1 c( G' bthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
5 C8 _7 f, e u4 e# dbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
% m n, I3 N2 ]. t* ], taccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- ~* m& E6 s+ R1 j( b% xCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
' s H t! V9 P4 t# [positive for the year-do-date, including high yield.
- L" i) n" j6 J+ l. Y. Y Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
- N& \2 Z5 W1 i, ^' ifinding financing.0 u$ E: e* M# Q6 M4 u
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- d' C% X$ {8 V7 _6 g) \, e
were subsequently repriced and placed. In the fall, there will be more deals.
/ f' H% _) y# V1 M& Y Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& L* ^# G$ q3 b* u+ h' I
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were$ [4 ]/ D, O3 S, h, t; j
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for$ |# M3 U2 v# m
bankruptcy, they already have debt financing in place./ c; e1 ?- b( o7 ?
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain: E0 F8 [4 T3 S) C
today.
+ x$ o% y7 G8 I E' Z+ Z: J Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
2 ~& i) U! W9 p2 Bemerging markets have no problem with funding. |
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