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发表于 2011-9-17 13:16
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Current situation
, Z. n6 U1 E7 A n& n' x The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
0 D* ~1 n8 g, O& f* aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
0 o2 R# d4 {. n- Cimpose liquidation values.
+ v0 K7 n) D& C/ w$ {3 v1 [ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
6 \8 n) s. _$ F1 C1 j' K* KAugust, we said a credit shutdown was unlikely – we continue to hold that view.
1 l4 q$ N. W3 h* H The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
% ]/ {8 ~, L* m3 Tscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.' [# @' M, V6 d Z: G% n" v
h8 Z4 h+ p" ]4 O, BA look at credit markets. r/ f8 @ `: J/ h% b; R
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in! @1 A5 T$ s2 j$ n4 g: T
September. Non-financial investment grade is the new safe haven.
% ^) e8 v0 q/ y2 a; ]7 D High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
$ }# h7 g9 H7 H+ E8 [then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: U9 Z% y/ ]8 S' L; D+ T' x
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 G! M) {" @! d; W/ M0 Xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
" q; I$ ?7 \, X7 F6 ^CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
! e$ m! k j, \* X+ ~' Opositive for the year-do-date, including high yield.
" d' L& u" n9 a4 `# P1 J. S Mortgages – There is no funding for new construction, but existing quality properties are having no trouble) W: i4 ^( ]8 U) v" c
finding financing.8 L& M( C, ]* A; F9 z- w$ F! c
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ j% s0 V: O5 y+ I) l& \were subsequently repriced and placed. In the fall, there will be more deals.
G/ y+ F5 [7 B- C Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and0 F- k' I5 l; X: B
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were O0 K+ }& p2 W, I9 P* V( G0 g
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 @" B+ S2 }+ v; V Z
bankruptcy, they already have debt financing in place.7 q9 j2 n. a$ M4 J, H; ]7 d) q5 d# H
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 u6 [/ B' h% D
today.
- C$ ], x0 ]2 C* f. [ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 E+ V ]& K. O% J3 vemerging markets have no problem with funding. |
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