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发表于 2011-9-17 13:16
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Current situation
% L4 ]: |5 g7 c4 ]7 A* @3 M0 q The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
- f6 Z& N5 h/ X5 G& \! ~as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& p" g: }0 |. H/ H0 X& J! _
impose liquidation values.7 r& X8 L' i6 H* t) R# n& M
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In9 m- X$ y7 @$ z$ F: p3 a
August, we said a credit shutdown was unlikely – we continue to hold that view.
* e* r+ H- E0 [7 T The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 J9 N2 u' e3 |6 S& y+ v
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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% _, N; {& P. E, o5 l/ {A look at credit markets
9 z& o4 W( M% t/ E$ H6 g6 e Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in( `# X+ S' G' O6 \
September. Non-financial investment grade is the new safe haven.
- _$ R- d$ G% w& c l" r5 A High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%& e* l* K- T5 h7 E! p. L
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1& z4 d5 p9 _3 u" j. Y6 {
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
" h$ q$ r" V \/ daccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade7 f! F7 Q5 O0 L
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are/ ~' `& H2 I& K! h) q \# f5 C8 ]# I
positive for the year-do-date, including high yield.
. G0 h4 E" L' K Q! c Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# T, P' C9 D; m; A# g, h7 P
finding financing.# ?" Q$ ~) I @ {
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they5 q" Z+ g. U6 b5 s( z
were subsequently repriced and placed. In the fall, there will be more deals.
( P+ \" k6 E- @2 k( Y" H. z9 X. W Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& U2 F" v3 R, S: G2 x7 p" l
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were) O% P1 f1 `8 Q
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for, U# f4 |; V% ?, n8 @
bankruptcy, they already have debt financing in place.
. b) c4 i" L' B& x6 j: p2 g European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
q, c r" [9 \$ [( b2 ~, btoday.
5 G% Y$ r( j9 d4 { Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
8 s: P" y# A* a# v5 qemerging markets have no problem with funding. |
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