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发表于 2011-9-17 13:16
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Current situation
8 k& u ?# g8 Q4 o9 D The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long0 E% C1 L% t9 o% s+ u/ ]7 C1 k) B
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may8 h! b# x) l% M" X9 |
impose liquidation values.0 p' t1 |( ]* [0 ^
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
6 N4 ]/ l, h, _1 K0 x6 w( [! a4 O1 K% MAugust, we said a credit shutdown was unlikely – we continue to hold that view.
& B) t- j3 l" s5 N7 p3 ~6 Y The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
% B( e- C1 b: I7 L( U) jscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.& W! v: T c( O% c# F8 {
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A look at credit markets
* r( m* K. N. R5 n$ z* |- j+ s Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in6 u2 l4 n6 R# k$ N
September. Non-financial investment grade is the new safe haven.
0 b6 r/ n5 ]& A# A; Y, p High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
$ o3 D* }5 u* o8 p! Q; Qthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
! w$ h/ `8 p$ D1 _9 m' wbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
4 k: c7 s( ?8 `2 Jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade0 L4 a \6 r* o1 L1 Z- g
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are% K. m/ z( U* _) ~6 E
positive for the year-do-date, including high yield.
3 r' Q& r- v1 ]) M: f$ B Mortgages – There is no funding for new construction, but existing quality properties are having no trouble2 s/ \3 q6 Z4 H7 C+ a: [3 r& T
finding financing.
7 `! [, E; y, N& F3 h) ]/ m5 I9 h1 g Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they* ?2 ]3 {- t' d) \; t/ W6 B
were subsequently repriced and placed. In the fall, there will be more deals.
- l. e4 B: o3 Z% Q/ @ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and: K/ c. J8 ~5 A' k2 U8 a& T
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
3 m, x/ e3 L3 U2 K" y% H: p" ]going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& K& I [& H8 O" B, J
bankruptcy, they already have debt financing in place.
4 x5 f9 |* [- n( \5 N7 U1 B5 \9 B European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in2 ?0 ~& T2 o5 p/ C; S5 t
emerging markets have no problem with funding. |
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