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发表于 2011-9-17 13:16
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Current situation
, e" z3 L" x, s+ |) J The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
. q# |, e% f4 s* z2 Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
% v! h9 D2 R& V" p" y$ _* Iimpose liquidation values.$ J1 ~8 o0 b! k1 F4 ~4 Q3 A
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In4 N0 R) Z2 ?% |% K- P; V
August, we said a credit shutdown was unlikely – we continue to hold that view.
: B0 p, _# o, Z% @3 o K* v; n6 }% l The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
! D6 o' ^ l6 V/ M# P5 qscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( D: s- Y& _4 y; X- n" m c" k
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A look at credit markets3 E% i+ M- C8 Z& s) y: [) Y. O
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
2 m/ v# K7 {1 f7 r1 zSeptember. Non-financial investment grade is the new safe haven.9 g/ |, o2 e6 w5 ]. q
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
. R8 U4 J, Z2 Wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 h8 ?* ~% _" O, B" bbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have) I0 _) Y6 X+ C
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# A' \6 L/ x- g5 H
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
( @3 v9 z& x9 P9 `# ~& L( Xpositive for the year-do-date, including high yield.
6 p" K' C0 x2 l( i! @ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 J3 O& e1 Q9 Y# W6 r) x- @! w! y+ ]finding financing.0 A6 S M7 w, Y( c
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they3 P0 P7 s0 R+ |" p- W
were subsequently repriced and placed. In the fall, there will be more deals.6 I4 ]1 ]7 H. D/ q
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
1 B2 a. Y1 A, p' J3 i) dis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were% B6 i: W7 R9 I) z
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for: Y) Y/ }* }0 \! C
bankruptcy, they already have debt financing in place.
, r( ~+ n$ Y5 c: c1 n European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ q# }* E/ x; v% |$ E
today.9 y$ q$ @6 M( u6 r4 _# `
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in) w1 G- v/ ~$ e) Y2 f
emerging markets have no problem with funding. |
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