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发表于 2011-9-17 13:16
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Current situation
3 G! n c$ _4 J$ j1 A2 d The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 [6 }; k; Z: p3 T! {" ?" Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may/ M8 ?, J: \( V8 a0 M7 W' y; m# R
impose liquidation values.
) A0 {/ B) i2 U In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In& X) Q4 b* ~. `) a! x w( \; P
August, we said a credit shutdown was unlikely – we continue to hold that view.) W+ I' o- E' _2 l. C1 V
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
) {! G, {# f) p; Uscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.0 S$ U$ z" M1 [4 E5 J9 S
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A look at credit markets
! \( l% n A+ o* ] ]* C Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
) O. X# j& S/ O, f2 @# N- fSeptember. Non-financial investment grade is the new safe haven.# b; A, p7 l) J3 u/ x4 c
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%8 o# u$ F; r, }
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $11 g- Q, d! P! ?9 i. X% B* Z z
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
/ D7 Y5 g, S- V" ^+ J& yaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
# A! A$ G, k9 H6 [! RCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are2 t- x4 E% x9 N: C% m+ R
positive for the year-do-date, including high yield.
: q9 h1 g, m3 f- w% d7 I, L Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ s' _8 |: G/ s8 J+ w& ?5 afinding financing.
5 p3 u0 C+ b0 o3 b+ m' R Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 D, f* k7 w' d* Q+ {# K7 Gwere subsequently repriced and placed. In the fall, there will be more deals.
; S- b7 v) L2 M* O Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ M( w0 Z5 t( N* q+ U% V
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' \+ T+ @4 L2 X4 Y( D+ E) c4 k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
- a( r: E1 h! [# fbankruptcy, they already have debt financing in place., A+ y0 p7 Q# r+ C% C8 n) b
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain9 c2 `7 w% M1 E% J" J8 O' N
today.
! F8 O- `( |$ a. f2 O Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
2 p7 @3 n# ]8 X. z4 ?emerging markets have no problem with funding. |
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