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发表于 2011-9-17 13:16
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Current situation
0 h6 z; T) U: P0 u: ^3 b( k The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long* @$ y* j! ^3 C* I" Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, P/ h( o4 T6 L4 v! p3 ximpose liquidation values.
) \* C4 G" w* X3 p5 }4 ]2 I4 U% M In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
" D" r0 f- y. Y+ HAugust, we said a credit shutdown was unlikely – we continue to hold that view." T4 B- x8 | f% ~" R- f6 S
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension" `# z; ]8 W. |+ q$ p" Y: n: J
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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- D* _' T: }% h. j- k0 H4 oA look at credit markets$ z5 X+ M" }7 {$ O7 d( x
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
/ Q) D- ~7 S2 m& \9 iSeptember. Non-financial investment grade is the new safe haven.
; i6 ~4 [. w6 X' Z N High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
. O$ M% W P4 ^! @7 P$ \/ Y! X% B( `then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 H! F! A$ a4 ~
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
+ C" y( P4 F! x4 }0 G+ Xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade( C9 m- y! r" p# s! r0 O
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" z9 C' u/ c( n" g' [' U) d5 s* Rpositive for the year-do-date, including high yield.. Z* l; Y3 i: H% t
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble7 V3 I, f2 K+ d% C# E1 ]! V% ^2 x
finding financing.0 p( ^/ [0 U0 f+ u
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
, c; F7 y7 A8 R, y2 swere subsequently repriced and placed. In the fall, there will be more deals.
% y; N4 d0 x- c2 \( M- c Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
5 Y4 J6 E* e6 |: X0 {& Qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were% G/ f+ A K# M1 u
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
8 c2 C8 t! E/ h4 ?/ Nbankruptcy, they already have debt financing in place.
9 b; ^8 \! ~! b3 U/ u$ J 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 in
4 N$ M. S; V% `1 e& z3 }# iemerging markets have no problem with funding. |
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