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发表于 2011-9-17 13:16
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Current situation6 e( K; D% G- l2 M% Y+ h+ C
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long6 I8 n6 o" w9 v
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 i% c3 F9 L) b# e8 d
impose liquidation values. y$ P/ N+ n3 X( X
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In! a }1 _' F v2 a- G4 ~6 O# B9 o5 k
August, we said a credit shutdown was unlikely – we continue to hold that view.
0 m' ~& ~5 l1 J; c The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 q0 y4 F) }5 ~# z1 `5 G9 Rscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets. k8 L V( i9 p C+ y
2 F8 S9 q5 s1 ^/ b$ c6 \
A look at credit markets
/ B* m' ]0 s5 t5 Z, m! E0 Z, i8 \ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: x! |2 f! W! T3 D2 ^" a: q- _September. Non-financial investment grade is the new safe haven.6 f# Z! r9 a/ V
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
% D/ H5 ?2 b x% q' athen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $11 S2 L2 L: a/ q- |$ @; k5 G1 H% C
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
! s: e1 A5 i' Zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
" F# S+ l$ o( A5 k7 s" {( d% K/ ]CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are5 N2 O5 g- _, a$ y! Z7 q& k/ t
positive for the year-do-date, including high yield.4 N/ [! E- C# d' L6 t9 u% z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
6 C" g c5 Y0 X2 V3 Hfinding financing.
8 g* z2 Y; E, J) c& G# E; o Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they$ H4 x; |5 Y4 @, O& d: \" L
were subsequently repriced and placed. In the fall, there will be more deals.
' F/ h! T, Q$ a% i A* L. ~ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 t( P7 N( }5 T1 d$ G! K m
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
+ F% B9 I4 i3 V. ggoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( W. a, ^% q0 X1 U) O! q; ?bankruptcy, they already have debt financing in place.
0 J2 [3 ~7 C, A6 B European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
- K3 d; `( Q8 e: _1 t, otoday.
* I' w* ^. F( P7 U3 F; ~8 ?9 R Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
8 B' C [# L/ k& K% yemerging markets have no problem with funding. |
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