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发表于 2011-9-17 13:16
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Current situation
4 k% ]/ w' ^; h9 h The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
8 B+ }. n4 @/ e+ K2 |as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
- j+ y7 C( g1 X6 P+ K; ximpose liquidation values.+ O3 [! }! @: W/ Q6 ?! h
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 _- g' ?0 a" @# Q0 U
August, we said a credit shutdown was unlikely – we continue to hold that view.
/ l1 w1 Q- l+ E: V+ l The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
! ?9 Z/ f4 k) Fscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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1 a3 i; i6 e% i5 V* K5 h+ o1 ~A look at credit markets' c: D2 f8 a& x& w3 j
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% F- I6 l2 y7 c+ b6 M
September. Non-financial investment grade is the new safe haven.
1 k$ L1 x, O0 g3 r3 y2 M High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
0 u1 W: y. V' X k% a2 cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1% ]% [) X) Z. k( l8 @7 Q9 F
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 g) v8 H4 M9 q6 w
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade- d8 Y" ?6 }$ H" a* @ k
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
# s- j! `2 W* O1 B2 n3 y K$ u3 Q+ \positive for the year-do-date, including high yield.+ G) r2 ^. h$ F6 G2 g6 e
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
; E c5 z8 e. a8 w4 Y+ Vfinding financing.
/ _$ m& u- d1 I7 v# s& y Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they' e: ?: O4 }/ E. u, ?
were subsequently repriced and placed. In the fall, there will be more deals.
! T+ n$ H, r& x; Z% T Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# N) l$ ^2 s" b0 e. M6 p' ?
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
9 Q! w* I1 k7 jgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for, B% ]" X6 E Z$ y* G
bankruptcy, they already have debt financing in place.5 p6 k$ R, h. [! ~2 a+ H
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain* g _ P' K" b% ?0 {
today.2 J0 K# k" Z: h/ C/ l
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in' ?- V3 C2 i6 p* S
emerging markets have no problem with funding. |
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