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发表于 2011-9-17 13:16
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Current situation
; H# |/ h' ?' w* T u The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ N; z" k4 o0 }- f; g
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may0 X0 S3 F b ~
impose liquidation values.! l! U: {& ]( J6 j/ F
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
. u; t, z0 F# ]8 a, Z; r. dAugust, we said a credit shutdown was unlikely – we continue to hold that view.* z: I- i e T
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. ]5 R6 B% L# |! Ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.3 ?; L \7 d4 p @& d( O6 q7 X, z5 S
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A look at credit markets; V( j7 Z( Y7 g4 ^! \! T
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
2 n. Q. B! L, r0 w oSeptember. Non-financial investment grade is the new safe haven., a/ C0 J& i4 |' n8 L' n
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
# Q: y8 _) b/ O ?# j5 dthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
% L. n$ w' F4 q+ Mbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
3 b5 F( }1 X+ G( F9 r! R( Faccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
$ }% E4 Z1 Y0 X; t$ v4 hCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
' m$ N: ?6 e! zpositive for the year-do-date, including high yield.' D: d9 j+ Z( g4 p9 G5 e
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble( T) P* F0 J& M) S
finding financing.1 _1 P9 \6 N. l7 L
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they) G6 r, S9 ? o6 O$ W* o5 F5 q) F
were subsequently repriced and placed. In the fall, there will be more deals.+ h) ]3 \, H! m/ q/ d
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 a" ~4 O9 j4 U
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
4 a2 l1 P2 Y: U) f* y, g6 `+ Rgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 t) P* J f2 w2 q
bankruptcy, they already have debt financing in place.
" d b& |4 z3 n' i) J" }# ^6 k European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain0 O/ M5 g l/ _+ D+ M' h* i
today.
, w* S8 S2 V+ V* `4 C6 S Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in8 L, \0 r, O7 X- U. I* j- M; W6 y2 `
emerging markets have no problem with funding. |
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