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发表于 2011-9-17 13:16
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Current situation
6 Q$ B! o0 d* U! N' h) Z5 ^& b D& P3 d The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long" W( X; W5 s' U/ ] Z* c; r5 i
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
) h: ?! s3 [% ~8 r& L6 h9 n- iimpose liquidation values.
$ D9 d0 v" R, }2 x In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In2 P- T5 `) b5 D! Q3 J
August, we said a credit shutdown was unlikely – we continue to hold that view.! y4 r3 |( M6 |8 a
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; U+ x$ i8 e& G3 @
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets./ i @. H1 p( u) F" {
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A look at credit markets
* C/ x$ f2 E% w& _ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
. x& o2 |6 h9 z$ h0 E( N' eSeptember. Non-financial investment grade is the new safe haven.
2 U1 M% O; i+ l$ c, \; e: b. y! m High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%/ O6 N+ r/ y" C" z. x1 R3 \
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1, J/ X/ v$ K4 o, ?# ~0 d1 b. j# k
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
S( f$ b H8 @, q$ Vaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
2 J8 k- J7 W9 s1 p. v+ lCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are7 I" g; J" D4 R d! f: H
positive for the year-do-date, including high yield.
- N1 g2 X4 @; a4 t0 } Mortgages – There is no funding for new construction, but existing quality properties are having no trouble/ s. v' o1 _2 U) l
finding financing.5 u" p4 q6 o1 A2 d
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they1 T% d7 x; U ]" d5 X
were subsequently repriced and placed. In the fall, there will be more deals.
0 y" C' k* _* ]. x1 {9 v F Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& `& X/ V# H/ i5 C _% `is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' l# B/ @# p: q
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
+ Q3 x9 v! k+ ^1 o* X0 J/ @' B7 Kbankruptcy, they already have debt financing in place.
$ i; e6 f" Z6 W& I9 K European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain4 E. Y. U4 w' J$ w
today.; m3 ?; F8 G+ Z0 m8 u
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in1 z. }3 s c9 l5 Z- }9 a t5 t
emerging markets have no problem with funding. |
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