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发表于 2011-9-17 13:16
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Current situation7 J/ x" x4 F1 I$ ?, o9 C! l
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 r% p9 O7 W0 l; d7 D/ S
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may1 [% T- G& T( d# S' [0 H+ g$ T
impose liquidation values.6 Z5 J5 S% T& s; U
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
! y/ B- S( O1 @ D. w% xAugust, we said a credit shutdown was unlikely – we continue to hold that view.4 E- ^- I0 O2 a9 m- z
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension% H% m- i1 V9 p7 e8 _
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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6 |6 V. Y( D; D" Z' ?A look at credit markets, v" [( O1 b& Q6 T
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- f0 |0 j7 W M% i7 Y9 nSeptember. Non-financial investment grade is the new safe haven.$ s) W2 ~2 G8 N# a
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 n) E" A/ P) R [/ p
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; V, D: j2 g" w9 @% Y2 z, h6 Qbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
! W& l+ A) i0 taccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade/ S! v; k* S8 d* i* v" y
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are6 r; U4 o- n. @6 l( l" V6 v3 G
positive for the year-do-date, including high yield.& Z- ]6 F( P# z5 r1 a
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
1 _& Q$ U( p% Ifinding financing.5 V# s( ?9 G6 B" |' r# M* s
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
; t6 `4 b5 }& L1 Xwere subsequently repriced and placed. In the fall, there will be more deals.6 J/ C2 e: p: B4 I' b3 V, Z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* @; A! X3 A2 M( s8 J; Z& ris now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
, V% r+ b0 v: p }( u( P+ [1 p# \going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
& F5 o% c) W4 |( |4 Ybankruptcy, they already have debt financing in place.5 h+ o, @4 E: k T7 g }( J$ W- n
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
: h; A2 `; h# e, s8 l- z" q3 \today.6 [: x2 f! X/ {9 `
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& S c1 N( R" O# ^! y# j1 x8 V7 m0 memerging markets have no problem with funding. |
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