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发表于 2011-9-17 13:16
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Current situation
5 y2 k9 O" `% y/ L The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, N3 ^) f0 p' f* \; ?& S- S9 O
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
0 M! y: g( P9 S) ^4 K3 rimpose liquidation values.
T. Q: q0 F- U; Z- }/ T9 m In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In5 P0 c7 O- M( s0 | d# S
August, we said a credit shutdown was unlikely – we continue to hold that view.4 J! ~4 B4 `- E/ v) y' `
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 z; B& ^- h }% S. V- y' b+ }scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets9 _- P+ l4 G5 O' X
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# e0 |7 D+ F: Z5 `September. Non-financial investment grade is the new safe haven.
# r8 h& ~& d m* o High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%7 @# ~: ^( V8 `% n4 J! h9 v8 P
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 o; Q' ~" E! I, B
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have; z2 _; p, A5 W2 K
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
( P0 s1 A" Z: nCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# {0 V" p! a) m% x/ d6 a- y9 ~
positive for the year-do-date, including high yield.3 F R8 {) U9 E
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble8 V# }* p" _ O: s
finding financing.
. {% \* O: ?; u, M& u Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
( n: p% l1 |1 N( @" gwere subsequently repriced and placed. In the fall, there will be more deals.
0 v: d, ^7 _5 D1 C5 e: V0 _1 x Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! T9 r* S/ w& \
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were1 S" N0 z4 D0 i1 A
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for/ ~8 u+ C- G& ~7 Z a/ ^4 ]5 o
bankruptcy, they already have debt financing in place.
& E; {( j+ Y5 m7 f6 u" U European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
3 L$ A! H0 ^1 S4 G. otoday.
7 b: w$ T+ t5 | Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in; }! }5 q5 _7 ^7 n S9 \& I) M
emerging markets have no problem with funding. |
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