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发表于 2011-9-17 13:16
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Current situation* }2 E9 g! q |9 M' Q% Q
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long' v7 L, E1 _% X
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
) O* W, F8 S$ p0 {% simpose liquidation values.
7 w4 c$ ?# }0 L: T# r. ^ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In; L/ {2 I/ Y% @1 @$ q% v+ M
August, we said a credit shutdown was unlikely – we continue to hold that view.
2 W4 h, _. m- V8 V+ S y The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension- d9 f/ @& ]8 M) p
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets5 u- l- u4 |- P9 q
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- c0 q0 r8 }; R! w$ |2 `9 D9 a
September. Non-financial investment grade is the new safe haven.% K2 s1 l! w. f; B/ p2 r. }
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%3 l: Z0 c/ `! x+ z/ L7 T
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1% V7 p5 _2 Q1 B7 E
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have, @; X6 ?3 m! a1 W+ L
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade, v% i* w3 c Q
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
. W' G) z* T3 Z4 Jpositive for the year-do-date, including high yield.% A9 m6 o. |9 M; t; C: D% W% x& W
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
5 ~5 c" k3 u+ A" D& i6 |finding financing.
+ d; N0 ^! P O7 V# h( E9 a3 c' H- @ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
! }. }* F+ ~+ a9 n; k3 uwere subsequently repriced and placed. In the fall, there will be more deals.
7 u6 d k$ I! V- `) ~1 a: m Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and8 q- B: m, M4 ]5 S7 X
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ S+ B; [9 Y6 ?going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( V% r; B/ N; lbankruptcy, they already have debt financing in place.
/ D1 D/ K U* `& K) W) j8 I5 x European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in& T7 g9 Z8 | e6 m; z
emerging markets have no problem with funding. |
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