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发表于 2011-9-17 13:16
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Current situation
. K/ {3 ^- n0 y6 ~ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long2 i' n$ ] j5 t' ~! r& w
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may' ]& X& _% A( s3 i0 [( r( s9 X
impose liquidation values.' s1 k: @5 ?* o* q! G
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In, n5 T C3 ?' i4 E6 z9 B
August, we said a credit shutdown was unlikely – we continue to hold that view.( X5 a: B- I( n6 t! m9 I1 N$ @ `" F
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension3 I! Y8 {! x" Y4 h6 G5 b4 f
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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2 F$ y; ]. k& C4 G T. rA look at credit markets
5 R* O9 N: p2 h7 m# S$ p5 B( \. m Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
7 p; P9 N: b8 R4 U" B2 ` ]/ r eSeptember. Non-financial investment grade is the new safe haven.
- [9 ]- z- V5 O" _" H High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
- D' ~* q0 ~0 v% Sthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
Q8 a9 z$ j. `( j; Pbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have. X" e8 m! J6 e' J6 V- H8 @, w
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
' D1 M# J; K6 U2 y4 Q2 ^* XCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
% I9 ^. N5 v3 Zpositive for the year-do-date, including high yield.
4 L5 J: G, i/ Q8 c+ N Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
! x" N& t) d v3 I* f8 q/ zfinding financing.
; T" y0 o Z, M( Z2 q: i) m8 P Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
! e, i# p$ I7 s6 c* P4 wwere subsequently repriced and placed. In the fall, there will be more deals.7 C" y% U% o2 m" D# i0 w, ~
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
$ B; t. t" n2 Y& K2 Qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
; b1 R. x$ d2 [- ~+ kgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for3 c8 y+ Y9 A/ \+ q( r* E' y p/ |0 e
bankruptcy, they already have debt financing in place.# G% x$ i. X5 F6 }4 ~0 ~0 j
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
2 |2 X: ^$ Z8 j* Ptoday./ f6 b" u' I& T& s/ ^
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 \+ I7 P4 e4 n8 g& T1 H1 M3 ?emerging markets have no problem with funding. |
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