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发表于 2011-9-17 13:16
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Current situation* }! Q: w9 [, J; Y' U0 `
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
$ j0 x4 l$ L7 ?& x" zas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
9 x# P+ R w2 c. J% pimpose liquidation values.
7 {/ e2 p8 l Y% A In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In) _0 `: B! U2 @3 n; t
August, we said a credit shutdown was unlikely – we continue to hold that view.
6 K; K. w* C: g+ d The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
1 b: v9 [% U4 [5 r/ S. T% Wscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
* b* K6 |/ ?0 c- `3 k2 x9 `* q! J5 u6 ~# t3 }) y) Z. y% L/ s4 j+ y
A look at credit markets
4 T F! T1 S! n7 R5 A$ [ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in: D' ~/ m) t; r3 m- m
September. Non-financial investment grade is the new safe haven.
5 F% s/ Y0 g2 _8 M5 u High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
" N# O2 f E8 t, G$ wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $18 o+ U* _! [2 l( @9 u' H/ R3 K% a
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have0 v% l2 b- `9 o: Z1 }9 @
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade5 U; m1 l6 c; n; W, B- {
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* n& A' o6 V& _7 ?) w- S( O
positive for the year-do-date, including high yield.
1 r) p7 i# J7 x. r$ v Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 u0 H4 C) ]- t! S* p% sfinding financing.
9 g1 y+ [. e6 ?4 B( Y6 } Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they. b. q z% L$ t# j' r
were subsequently repriced and placed. In the fall, there will be more deals.
5 \+ p, y4 x% i0 _/ w* S4 [2 A Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and1 i$ E! d( \6 R/ r+ [
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were$ K- [9 b: n" o% I
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
1 O3 Q) |8 g5 mbankruptcy, they already have debt financing in place.% N. x+ e8 R( z7 W" x4 m
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain2 H* J" p. J/ I B( {. E7 J
today.& e- g' j$ n6 l& |& @* ]
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" W! ]4 A( K. W/ G
emerging markets have no problem with funding. |
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