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发表于 2011-9-17 13:16
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Current situation
5 N8 N8 y- }& b% V& @5 g0 g The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ d7 v( I9 ]& @/ u# }3 K1 s8 Las funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, N( d7 ^* h' b! W2 nimpose liquidation values.
& w4 v# O% q7 @3 Q0 L In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
4 U6 p; b7 ?$ s% F$ t, Z% _1 PAugust, we said a credit shutdown was unlikely – we continue to hold that view.
4 v: m' Y/ x) A9 C5 C The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 A# B2 [, ]. c4 ^
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.- q$ x2 {8 H7 h+ ~1 T' a
2 ?7 @' G/ u; f' |/ T7 p- Y
A look at credit markets
. \" m7 r; w! [3 ?, l Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- v, D8 [" e0 U& W3 c
September. Non-financial investment grade is the new safe haven.! } {* C; s( U3 |/ d! i7 v
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
5 L4 Y( x3 i" D9 F" K" L4 rthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
& n8 v- j! T. Zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
7 `4 @" z" }9 H, O3 waccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
/ c/ O- Y6 j, jCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- M$ K2 q" h4 A* o! J! ?positive for the year-do-date, including high yield.3 r! F5 O' X( ?" X9 U# a ~! A# y
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
8 u0 G2 p; {4 ?# [6 K* Rfinding financing.
0 {* d3 E- y% d# g. W Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they* M) X$ }3 ^* l/ H: D8 E
were subsequently repriced and placed. In the fall, there will be more deals.
2 S- Y7 }3 S& q4 g" @, A Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and. Y1 a. T. F+ A1 k4 }7 @
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
* P: M m5 `% B, rgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
2 ` R" P: I3 J* o! ?( T/ zbankruptcy, they already have debt financing in place.) `9 f5 T+ h& ]/ g3 P# Z+ r! f* j% l
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
/ B0 }5 @- X$ ?4 U; Y. m2 l8 Etoday.
' {% U, v7 l0 o; A Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 m$ a; G/ G5 e* m/ u. G7 gemerging markets have no problem with funding. |
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