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发表于 2011-9-17 13:16
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Current situation
5 i; ]4 o/ E* v The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& \- X3 i- M: t7 sas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
^1 x% y) r+ u5 o# Yimpose liquidation values.$ A& ~" d7 Y+ b1 e" Q! o
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In- g+ c+ X6 U F0 `+ F
August, we said a credit shutdown was unlikely – we continue to hold that view.
) O" F+ }9 W# E( W The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
* m4 ]& \) G- V" s8 V' T. l1 }. X [scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
) D1 ` }! \ W/ o! u$ s
" f$ n6 W" X9 l6 HA look at credit markets
: I# K5 r) R V: ~+ A( _/ _- ]! X Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% i1 s# K3 P/ K0 u: }! ?
September. Non-financial investment grade is the new safe haven.
! K. ` g: L* i- ~ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
7 i' q; o" o S. }) \0 R4 Qthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
- w1 L, K! V7 [2 s6 ^billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have4 F7 P% J. f# j; l- C
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
7 M" W5 m }4 a2 m, C5 l& mCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
. M1 T9 g1 N2 Y: npositive for the year-do-date, including high yield.
9 ?$ U: d- y g( F( v/ B2 q! F Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
8 }( f- b Q" N0 Qfinding financing.2 R1 y/ j: i& [) `4 s
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% W& N, V" J0 h4 J# J
were subsequently repriced and placed. In the fall, there will be more deals.% R3 \1 _1 `+ ?# J( t
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
. ?) k6 P% N/ V& T6 H3 fis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were" V" l$ y; n8 B) w: k' t
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" I1 S3 v- C$ q( `! h0 u
bankruptcy, they already have debt financing in place.8 i' t P/ }+ H% Q5 W
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain3 n/ v1 u$ ^1 C- X' K8 x* Z
today.
& ^$ f3 N6 N( _# {7 w; ] Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in1 d" F- @3 v6 y$ t; p
emerging markets have no problem with funding. |
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