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发表于 2011-9-17 13:16
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Current situation
: n1 s+ s$ }' G The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long0 e5 u1 E3 q( y2 F k; {+ K& i
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may3 u2 x( w' p9 r( R5 J
impose liquidation values.
/ \" S8 n+ Y) f9 b5 U% L( _8 P In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In6 }+ j! r7 O/ T, z; F/ v4 } D
August, we said a credit shutdown was unlikely – we continue to hold that view.
+ n1 R+ H( L" F5 S c. O' L The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
( X4 e9 H# e# T7 H) C8 C; ]6 e: P% F- b# Escrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.# @8 v8 L4 D1 u$ Z/ @' n
- z8 `, A; q, e' M( HA look at credit markets
+ t7 `) g$ u! q* l, E# Z Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in( c* z1 d- `8 E& K, p
September. Non-financial investment grade is the new safe haven.. T' p: ~1 Z G
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
# r" b7 z/ r% r- I+ tthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
1 D) U2 K m$ g fbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have3 [# y7 W6 C, K j! J* E
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 R& g2 {6 a. e, j3 hCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
) ]1 t* w; t6 h& j) V7 Wpositive for the year-do-date, including high yield. {$ I& A3 \$ }9 W1 S! J6 _/ M
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
- B; x- X/ V, _$ v U$ r) Pfinding financing.
3 h& y6 J- F7 b6 z/ e Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
( w: v8 i' O6 nwere subsequently repriced and placed. In the fall, there will be more deals.
* K" G2 Z/ n& f; n) W# W5 m Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
6 `9 j, _/ ^, h; `is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( l) D! f1 r( U* y' }
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
% c. z! n. s, ^% V1 ]% Dbankruptcy, they already have debt financing in place.
' i8 o, V. D, [ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain0 t+ O6 U) o8 s; K/ c
today.4 a+ f- ?) d {' n% }1 p- l% c
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in6 @ D" u2 R3 q2 N7 Q7 |
emerging markets have no problem with funding. |
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