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发表于 2011-9-17 13:16
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Current situation- b, t- @; F7 l( v
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long# A) m2 [9 G5 z% s$ v k& v
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may$ }2 \9 \' f; n B" q: i. r
impose liquidation values." G1 i9 D6 u' n
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In, | Q! b& A% O! Y; T3 L
August, we said a credit shutdown was unlikely – we continue to hold that view.
) H9 T( u) p( O0 ]7 X$ M" M The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension5 U2 t6 ]* ^* w0 F# `0 b5 f: a1 O
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
5 ]" h0 h5 R& _+ E9 h m* U9 e
0 N$ Y5 w2 X0 B- b2 b0 cA look at credit markets3 R7 |1 m# X4 _, U: U+ O" I6 {
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- T4 k/ n3 q4 M" r- r
September. Non-financial investment grade is the new safe haven.
{% ]6 ?4 O% o: P' H High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%" `+ | P9 M/ g, k
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
3 C' S8 I/ S3 Bbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have0 B# m4 r0 M }( y2 V; b
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade+ V+ J/ z, @8 Z U$ _5 v
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" f$ A! J, @' _positive for the year-do-date, including high yield.
$ X8 L5 ^' \& D Mortgages – There is no funding for new construction, but existing quality properties are having no trouble* k, D5 f# [: V% j, f3 |' N
finding financing.- b0 i# z0 x3 {7 V* _
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
! x' I8 j& C8 k8 v8 cwere subsequently repriced and placed. In the fall, there will be more deals.. u9 Z9 A. Q- T/ `. ~; _
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, k+ J% q" O3 c, B! I5 C* K _ ]is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( e+ V7 F4 V* m+ |
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for/ ~5 ~# P6 Z; h" M( ?" Q5 l
bankruptcy, they already have debt financing in place.
3 c9 y0 s& k8 d' q& X+ Z European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain. N! C& e. N/ X2 Q
today.: l; ]+ o) e. j4 t- g. K d
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' p4 R8 f% Y. s( T Yemerging markets have no problem with funding. |
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