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发表于 2011-9-17 13:16
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Current situation
) D4 |$ u; U p/ o. ]' q" j The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
2 F! y. S" e& r& }9 pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may7 {0 t' t4 ~9 f* c. U
impose liquidation values.
! P' n, O* y+ K1 _ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ N" ~* S$ W0 q. \( A8 h7 U' m) yAugust, we said a credit shutdown was unlikely – we continue to hold that view.
# k ^( S: }) H/ R4 E$ q" J The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ p+ T+ y6 w* M2 {( Q
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.7 ? U* D4 p/ [. y' w
* P% b2 J" j2 ~# z. E4 C
A look at credit markets5 f& G# R- N) k4 M4 o
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in, W4 a: j( \5 d
September. Non-financial investment grade is the new safe haven.
k R5 J& @ n. B x High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
- \9 L- e+ d. k: @- c% m: vthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
& Z( v1 e% ^: T; ] x% v, Cbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 ^( ?$ F5 g; X& i% k0 {/ ~, m9 Z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
& ?# |8 |. [, x; r J1 s* ~2 M/ UCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
: V8 x3 w3 X4 Gpositive for the year-do-date, including high yield.
/ c/ J7 C; c! c2 r" a1 r3 q Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
1 @8 ^1 q* d- ]* L" xfinding financing.
: D: U6 z$ T; K1 t" H, y Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 W! H, u2 r; Y. Z
were subsequently repriced and placed. In the fall, there will be more deals." _7 a1 U2 W1 b! z# f
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& P# k5 I7 y7 iis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 o+ q& b6 w8 ^1 hgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
3 F% ^* l* `2 U( p) ^bankruptcy, they already have debt financing in place.4 d& U0 z/ ^$ `) y- `
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
# ?5 \% c% Z$ [, M' dtoday.
5 F0 U. P! r: F$ Q; E4 v; N Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in* \9 p1 A/ n' w' M+ R" r
emerging markets have no problem with funding. |
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