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发表于 2011-9-17 13:16
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Current situation
$ V! | {) ^2 U+ D* ] The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long" m* C. _' {7 W& I
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may! c+ M7 j1 O5 V* N6 c# i+ @4 o
impose liquidation values.
; u# R* Q$ f9 x' O7 ]5 W% j In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In* p s# [1 h( g ?0 S6 f2 q
August, we said a credit shutdown was unlikely – we continue to hold that view.8 E, I, z$ \& k% @
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
" H, {+ M- q, @. v2 x9 Z" Wscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
$ J& b. z% C) V# @' u2 |4 p1 }
8 `- L _* b2 rA look at credit markets4 r! @. p% l2 j' N6 V
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
7 L3 m$ S: x/ x% ?September. Non-financial investment grade is the new safe haven.$ ]' o: t3 Y7 U& ^7 R
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%0 g; P- f" O: y/ r* l3 A
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
! D: E. E( n8 v; f8 i6 Z6 cbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
& a! U2 G% X* e+ W7 kaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade1 C$ w6 @7 L" |$ ]
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. A2 @3 K2 c/ B. V. A
positive for the year-do-date, including high yield.: _* O% w! N5 j
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
H* w& N( S2 Q4 x' wfinding financing./ ~. `+ Z1 E. ?$ R1 H
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
/ k4 d. S# v6 ]5 ywere subsequently repriced and placed. In the fall, there will be more deals. D; N; |1 L" D/ `
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# k9 K# w- C' y% a: N
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 w `5 m+ B: ?$ ~# ]going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
2 D- i& Q& F6 h- V% \ zbankruptcy, they already have debt financing in place.: g6 J, q3 Z5 B' B* t/ K
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
) ?! u* h& j/ b3 ^$ g) D) [today.
- G3 a, W& `2 t6 O0 @2 p; T Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
; r5 [: E; R0 X/ }emerging markets have no problem with funding. |
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