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发表于 2011-9-17 13:16
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Current situation
! p. p; X/ d' z- Y# a$ } The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
3 i' [8 W6 U T V) uas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
5 U' B8 Z/ C8 P) m0 W0 K/ t1 C; R; Eimpose liquidation values.
! r3 v; S/ p8 ?9 d6 l In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In$ l) L2 A9 z! P7 |1 M
August, we said a credit shutdown was unlikely – we continue to hold that view.2 T2 T3 _3 [# V& d$ T% M7 ^9 p
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension2 w; u+ S" i2 `/ x% {- `2 w
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets9 _) e4 ^# ]4 q L( e# J* ?
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
5 j4 p1 z. `3 G4 L, N* oSeptember. Non-financial investment grade is the new safe haven.; v' J( N, K9 I: H
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
6 ~! K2 p i( F. d5 othen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $13 j" Q+ P8 D+ E" Q5 k6 c& A g7 b) e/ d
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
# o) V# }, j- @9 I( ?( l& s3 taccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade( B2 |* O, J' R8 e
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are) W, K& Z! [; ^: z3 E; w0 k
positive for the year-do-date, including high yield.) {. d. @( D7 l; i6 o. m
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble) l3 V0 t8 z3 E# I
finding financing.3 A: c' {$ q; O$ O0 U
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
# t( e" w" T# E+ R( awere subsequently repriced and placed. In the fall, there will be more deals.5 o' S7 v* O5 s" t% o; ~' y' T
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
7 @1 t% j6 ~9 P5 Y" z- E; Mis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were& e, ]+ A7 U$ ?) M( k9 \) F" K# z9 x4 m
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
# j0 p% D5 _8 g, ?bankruptcy, they already have debt financing in place.6 ?/ B; ~4 r' n' S
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain( p( z3 T7 X" B
today.
^3 y9 F. h* V3 h' b Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in+ n9 q6 _. s' i1 I) c! n: c
emerging markets have no problem with funding. |
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