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发表于 2011-9-17 13:16
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Current situation& s" |4 l" Q' ], x6 H
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long/ d1 i2 @/ m1 O' }- O8 T
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
/ G- O. D; k2 I& ]. T' M, ?impose liquidation values., F- q9 V# G2 e; E- z. r
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* g/ g3 Q" r+ r6 o: G5 ^August, we said a credit shutdown was unlikely – we continue to hold that view. [$ o1 j" C$ T% t. G, [, C" }
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. L8 r' C Y/ A
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: I4 q# L; O+ o% i! C( K( c
0 r- y) T: L1 n& G& b/ aA look at credit markets
v6 `+ H9 E" |# T( G Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, @) g6 S9 Z" D- J3 p" GSeptember. Non-financial investment grade is the new safe haven.! |' k6 a& w# a
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
" o, `9 [- l" D* r! u! G# v5 Jthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
! `/ W+ Y0 A" n" J5 q) U0 H: Obillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have4 Y: m6 C: X4 A1 f
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
3 N4 Y" K) A, _. h+ k" M0 z% LCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are5 E/ o' f3 P8 q4 U& Z: f4 p
positive for the year-do-date, including high yield.% r d2 y& [# X8 V- D! D
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble! x/ @% i" }/ c* {6 K- v, [0 ^, G( H
finding financing.* D$ `& p' o3 I% h1 m# c
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
9 `0 F7 I- J6 A! E( a2 T( l7 `were subsequently repriced and placed. In the fall, there will be more deals.- q/ e: a& C5 f+ T8 G9 l1 [
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
7 o3 i; Y7 W8 @, u6 {9 uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were1 f3 j; A* p5 T5 ?6 |1 v H
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( C+ a& @" ]) [. }* `bankruptcy, they already have debt financing in place.
1 _7 o. _; F+ | European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain) r4 y3 l# X: }3 J V- T
today.
, @# u6 I0 p# }5 \" R Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in t n2 a" `$ R+ L" g
emerging markets have no problem with funding. |
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