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发表于 2011-9-17 13:16
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Current situation
8 I1 r. V' z" d/ S1 i5 L The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long6 r/ y# l' r* p) m, _& M( V
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may/ F8 u3 x$ N7 ^+ m {& I7 }* V
impose liquidation values.8 }- I+ c$ @ S; N9 h. E
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In0 p4 S$ A; O3 h% u( D, n! S
August, we said a credit shutdown was unlikely – we continue to hold that view.) v' I0 k# j/ ?# d& [: F6 d; K
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
9 Y; [& s( z- }2 j( dscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
o) _9 V0 ^+ o) @9 q2 K5 h Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- J8 X- b$ B6 d" ~9 }$ \
September. Non-financial investment grade is the new safe haven.
( I( ? {$ {9 I2 ]6 h- l$ | High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%# }% X w& I9 j
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
! |0 ]6 a5 r2 ]7 o* _; |9 fbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
- l/ K( V5 [2 [) _4 t( {0 ]% N; j% [( kaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade; V* L3 ?* ^" M6 X" A* U+ T/ p
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are0 L2 q; j& e( O5 }, R: b* w! a* U
positive for the year-do-date, including high yield.
! C; _9 P% e# u( a8 `4 d Mortgages – There is no funding for new construction, but existing quality properties are having no trouble6 w$ g6 Z& _8 d. C1 w1 d
finding financing.) L* L4 x' a+ g( `4 ?
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they8 h4 V/ v# C7 k M! M. ]+ L3 m
were subsequently repriced and placed. In the fall, there will be more deals.
+ U. K+ `) @! Y6 p5 v$ x Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& m( V7 v- D! U) `3 x: y0 his now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were0 g: O& j5 A* v, U+ J! h' g
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for4 l3 m; p6 H1 ~: j8 U7 W
bankruptcy, they already have debt financing in place.
8 G& t2 [9 U7 r: @ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain7 \- T, v5 j g. Y
today.. K0 o% r& _" |$ J0 Q% D& k- T! B
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# R0 z4 m ]# ]* G$ S; k3 P
emerging markets have no problem with funding. |
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