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发表于 2011-9-17 13:16
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Current situation
5 V) ?/ q# Y+ E5 C$ T5 D The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long+ v4 J" H: V7 D' o# R# @4 W
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& g0 [. B, d* m# h! d+ Y) f4 d/ p
impose liquidation values.
9 F) A/ w0 I' m/ ` In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
6 y! B# _- P! c5 DAugust, we said a credit shutdown was unlikely – we continue to hold that view.
+ Z# Z1 @ w# r& L' r. D The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ e( \9 V9 `; c! f8 u! nscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: {( r/ b* z+ l0 l8 Z
7 e& ^6 Q$ T8 p" w8 S
A look at credit markets& ~2 L6 S( K3 ?9 L. f
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
8 G. p6 k1 `5 E' v" s+ mSeptember. Non-financial investment grade is the new safe haven.
3 v5 x0 c4 {1 l High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
' J1 m3 k( T8 ^. Wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
9 F6 }6 l, A) v0 Qbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
: S( z+ E( \8 H, d/ E Oaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
3 v! H b* k/ J6 p: }- c" ECCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
# r w( K# ?/ R: t& S0 wpositive for the year-do-date, including high yield.
$ X: O5 P; ^+ u. `* O9 s Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; M r# W$ t3 d" W) H. r$ ` ^0 M
finding financing.
! s0 `4 S; q: S' D! p4 _ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they; @+ G6 j* X0 C# x9 t1 F
were subsequently repriced and placed. In the fall, there will be more deals.7 D9 z! O" u) W& ], \8 Y
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
: m$ u0 K1 G) P, h5 E1 Pis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
/ k* D/ [/ W! Cgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
+ a2 q, m8 E+ m/ ~5 c: pbankruptcy, they already have debt financing in place.
4 z, O3 s8 Q6 _! |% [+ i2 F" f European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
8 z! I; O3 }' ftoday.+ j- m, t- V4 Z, [
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- U% d+ a# _# l# }# X1 e3 T9 e. I
emerging markets have no problem with funding. |
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