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发表于 2011-9-17 13:16
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Current situation* \- ?( o$ s5 K' g
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, ]2 E- {7 s* ^
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
+ p! _! I* Z* U5 mimpose liquidation values.- [( S5 M; i2 ^, p2 s
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
1 I/ ^8 Y$ q, G1 ?August, we said a credit shutdown was unlikely – we continue to hold that view.
' ]) T6 B) r1 U" { The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. e. H: I* n0 \9 pscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.+ p( B3 B( @7 l" _; G1 \9 |$ W
R) {: F3 z' D0 n; {/ Z1 U( o/ uA look at credit markets$ K7 ^; p: W! b' g; {3 I& O. e
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
/ V x7 s5 ?) T5 J4 sSeptember. Non-financial investment grade is the new safe haven.
7 `$ s7 [5 d! l; X7 T3 i: s5 u( g High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
/ V; y8 s; q2 A! o/ t& l. a1 Cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 ?, E6 l- a9 r0 k/ c4 Lbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, g$ o" A' Y' h9 J+ H5 {access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
2 N: A# K2 l, xCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are- N2 X7 H, t3 _4 J& J& S1 a4 }) F
positive for the year-do-date, including high yield.
$ z/ k/ `5 O7 X( j! q6 M. { Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( g- X; G2 p( |; `/ D9 efinding financing.+ f8 n4 f( l! Y
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
) p2 g6 b/ y! {7 uwere subsequently repriced and placed. In the fall, there will be more deals.
' {1 R6 Z# @% J: E( y Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and$ s+ g$ ~! S1 H' G
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were3 k' P6 O8 U) K3 h$ L
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for$ i7 G% w7 X) ~4 H. [& O
bankruptcy, they already have debt financing in place.1 f: [& o x5 A
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain- l4 g# K" E9 \/ z; Y) U
today.
* [% U9 R2 M4 H. {" ~1 B' q% @3 K Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in, p8 C* i/ w3 Y* H# p; H5 g
emerging markets have no problem with funding. |
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