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发表于 2011-9-17 13:16
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Current situation
2 f6 C( `3 {5 d7 W% E0 N9 V The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
" [" z- [' c y; G- ~( t/ Has funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may- Q8 c- q. d8 z; H6 d' I8 S l; e8 O
impose liquidation values.
1 s8 @, L6 O% U) {5 C' p. K In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In& N% e, x2 u f0 V* G3 S+ a1 D6 t j! J0 p
August, we said a credit shutdown was unlikely – we continue to hold that view.
9 y0 y* \+ u& J' V; q) G The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension" ?& K' T( N+ d# x
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
7 c' _' z: A( D; b4 u Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
q1 s# G. S; Z4 u ]September. Non-financial investment grade is the new safe haven.# |5 @7 g9 X N. F5 h
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%2 [7 X0 T4 e1 i, t
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1* p$ A+ L0 n( z. }
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
@% D8 H& W' R& p2 g$ J7 faccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade7 t) x; A0 A7 J. P4 ~# T2 T
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
$ g1 |2 G" V' ?! L, }4 upositive for the year-do-date, including high yield.
. w0 `* [+ I# T, [/ n8 a Mortgages – There is no funding for new construction, but existing quality properties are having no trouble( [6 n* d1 `# ~4 }' G9 y
finding financing.
# c Y' L/ \% U1 ?$ y- t$ z Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
( [' \* F# ^* w& lwere subsequently repriced and placed. In the fall, there will be more deals.% E( D# ~' m0 | L
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
p: R! X* c" Y1 b- s$ ~2 |1 e0 ~is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were1 Z9 I: i$ D/ P, L; F( {
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
b% N2 {9 t2 r1 N$ dbankruptcy, they already have debt financing in place.
" P+ e' c8 Y4 X4 n" B1 A European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
6 v% M# Y! @0 f$ m+ Z" g/ K3 Y6 Q# ftoday.
$ a* ]9 {2 U; a' a% v3 G/ [! ]& f& K! V Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
! k( v) c! `! d1 g; F. Cemerging markets have no problem with funding. |
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