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发表于 2011-9-17 13:16
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Current situation
4 c( r6 C& ]/ Q1 f The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, o+ H3 Z$ Q0 ]; f$ k
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
9 |1 ~8 [% i! L' Gimpose liquidation values.1 [# l5 Q& I2 h2 ?/ ~
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# x" ^* P/ K; p9 [5 x6 O VAugust, we said a credit shutdown was unlikely – we continue to hold that view.1 d, ~+ B7 e0 O; Y' n
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 b7 Q9 J6 N/ N. C; a
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.1 r$ t3 Q; x! ^/ w; g3 B% J) b9 d
: D1 J+ _3 \% q. |6 n2 ~
A look at credit markets$ ]# m7 {( y7 y6 |% ?
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in* e6 J P A7 I$ o D; f v' ]" @/ O
September. Non-financial investment grade is the new safe haven.
$ U* M6 {& y" e2 n, l& i High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%, E$ V. |& D9 O' k
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1% l$ S6 Q5 b% O5 F$ J# U- o# U
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* H6 D( f& J* Z' Oaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade" O- L+ f! \' i1 c, D
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: y5 r6 j' W" Y: o3 g
positive for the year-do-date, including high yield.
2 ]* Y, G: g! e Mortgages – There is no funding for new construction, but existing quality properties are having no trouble- p( l. f' `6 O% x5 O
finding financing.
+ e3 z4 S! z. o3 o0 z; D. b0 ~: c Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they H8 d$ B; U. e( c+ M5 o" g
were subsequently repriced and placed. In the fall, there will be more deals.0 [$ Z9 U4 v4 m" ?
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 O% }+ ~* m/ f/ o! V! k' W
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% d" \ J- b2 _2 y2 [0 ogoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for L+ u4 L z% S M1 S6 A" K* @
bankruptcy, they already have debt financing in place.! x8 A, X7 r- H. S' N/ C6 A4 W
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
: _$ c0 T0 {% ztoday.
) K+ B( J+ Q8 ^+ d8 O Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
+ K$ d& p* @$ m9 S# |' Bemerging markets have no problem with funding. |
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