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发表于 2011-9-17 13:16
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Current situation
. @3 F3 |0 A d5 R' i8 | { The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 J1 C8 f8 u# c+ C" W8 Das funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ i# a# Q4 l4 o; jimpose liquidation values.4 _4 v/ R8 v6 Z2 r: P6 V+ J
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
- {# z8 b. ^0 j" e- }" w% g3 HAugust, we said a credit shutdown was unlikely – we continue to hold that view.+ }1 \2 U6 j, x* r3 J- B# i" t
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; u6 z2 O" r J: K, H3 u8 W1 f5 o
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
7 P a3 X6 c R* I! S4 F! X Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
7 @( C* D* Y% t! C: ^6 W7 fSeptember. Non-financial investment grade is the new safe haven.! \* S B6 G; ^2 o8 h! ^/ i* C% A
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%: L: B& Z4 i! _- u2 D* c4 |9 \
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
& T! l$ k1 T, e" dbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have s) |! y( ?+ x f J \7 ]
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
' W( p5 s. k; F5 A( t1 X9 J9 |CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 p& s" M/ O8 B* a) l* N3 Z1 A
positive for the year-do-date, including high yield.) O, Q, [: Z) M5 g' E) `& p
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
4 ~# u( J% v# \4 ?1 bfinding financing.
3 s2 H$ P1 P& \' d Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
7 z- J3 r$ N, o6 t0 Swere subsequently repriced and placed. In the fall, there will be more deals.: P( v) U, [' ?/ E' a& N& @$ j! l/ I- T
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* C R* T5 n/ h8 L9 o/ fis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
( c6 a1 v! T9 ?4 r+ E9 U" Ygoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
3 t2 \: i3 k, A$ }/ Kbankruptcy, they already have debt financing in place.' Q$ J. c3 z. x5 l
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
; M* c4 g9 ]4 E5 dtoday.
9 ?- K2 ?/ ^! g0 r" z# S: P( o Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in* D1 h& ?9 M- J+ T& k1 P$ }
emerging markets have no problem with funding. |
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