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发表于 2011-9-17 13:16
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Current situation
) h' [* c1 b7 B( @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
. h# K) r8 R- Ras funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. v% z' T" Z, x, A2 [' F
impose liquidation values.
! v9 m7 a( o Z In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
1 ^9 _4 U5 c9 P+ Y! gAugust, we said a credit shutdown was unlikely – we continue to hold that view.
2 x: U% Y1 X% I2 {6 O2 n; y2 i$ U The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
* n/ K! Y% p7 D" X* Ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
( C+ y" Y: Y2 R% k0 {, R( Y8 y- o Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in; p, W- F- ^- w7 p
September. Non-financial investment grade is the new safe haven.- B" ?3 s+ o9 Y; R; i1 z# ?# t
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
$ _9 \1 N3 ]* l, n5 l' rthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1; n5 ] @+ m0 p# ~
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have* B, k: W0 f7 @" s
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade6 a* x5 ^# c( p* f# J8 @
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
& O6 q e( v: O. W% S9 Y) [positive for the year-do-date, including high yield.
4 t6 \2 C! V7 ?; {7 T3 H8 y0 Q1 m Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
1 l) E6 q* p# n5 a9 z$ |: Kfinding financing.5 v1 B' R% ~- j/ _5 U: Z; [" @
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they" ~4 X* i# [) ~, q. o1 r7 T
were subsequently repriced and placed. In the fall, there will be more deals.8 Z0 I- `/ ?! G5 A
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
: o$ E/ u- @! I4 v; _3 V/ V- Gis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) O0 m6 {: W" _going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ @, _ Z- g( @% F, G1 \bankruptcy, they already have debt financing in place.
5 T+ ?6 q* T5 m3 B! } European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
$ e Z, E4 o [today.
$ }, T, X& D; w! n. M Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
8 V9 O7 T7 P$ q. N( uemerging markets have no problem with funding. |
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