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发表于 2011-9-17 13:16
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Current situation
O5 z" J3 ~9 {* e! p# w! I7 y- q The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long4 v2 `! ]. T1 C
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may, a( A6 G+ A7 E2 P' @: {
impose liquidation values.
; G! y# G6 a% j$ D In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In2 D7 P: m& `- n; `3 ?: z3 G" {, {
August, we said a credit shutdown was unlikely – we continue to hold that view.9 A( ], ^8 Y( ?( m! r1 A5 a. C
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension# d6 P1 o$ {1 P
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; d0 y0 o8 _- l
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 D& u& W6 i/ A N3 H* p
September. Non-financial investment grade is the new safe haven.
' M8 S* ?2 l# i. {# c" e4 i) b$ B6 r High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
: k" l2 l2 G* A9 O' Wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1- q; e1 S" o6 f+ j7 \' F0 D
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
: [, e: w( E, o% P+ V' n7 Zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ ~5 M7 w5 _4 ]6 ~2 ]! g4 V E
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 g; V" F6 \4 U% g; h1 p$ K
positive for the year-do-date, including high yield.
5 l- ?: i; t9 D# K6 Q Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ n4 V% z- R3 y
finding financing.$ ~6 Y Q( R; N. k( _) m
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
- D$ a# l# i7 H3 x9 |) |. lwere subsequently repriced and placed. In the fall, there will be more deals.
- v; j# l2 ^* {) k9 n# f Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and1 a) t- W8 j8 ]1 T/ Q# P4 I! i
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 X: c: a3 k" V( c. _* o& v
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
- A9 Q/ {& D7 l- h- `' V* abankruptcy, they already have debt financing in place.1 N5 g2 f* N, W1 P T! Y% g/ S/ t
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain4 E$ r/ B; }' \
today.
6 S/ M' C7 ?8 r. R0 M: M Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in, M$ k: `+ S* x& Z
emerging markets have no problem with funding. |
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