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发表于 2011-9-17 13:16
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Current situation
- S* t3 M1 d$ k, w2 I The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long2 _) r, r: M; x" j8 O! A
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may3 a# E, D6 ^2 A
impose liquidation values.
; y' Q% Z% s P8 M, S. w In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In, n9 X( i7 S9 y6 O/ d; Y$ ]
August, we said a credit shutdown was unlikely – we continue to hold that view.+ ~1 D8 `1 ?8 c; _( y" Q- [/ Q. g
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension+ @4 N- Y4 V( ~4 x
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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1 {0 p' P2 }* J/ b! p. sA look at credit markets0 N- V( j" X' x
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
5 y& W; `/ O4 R, F1 JSeptember. Non-financial investment grade is the new safe haven.
7 J' L4 s& z& F" h. p5 g+ A High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%3 m0 T6 x \" l
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
# v# x" C: y. ?' v- f8 g" s8 [5 `billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have4 T: r0 z( m1 `( ^' L
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade, X* P1 C. W' p. A
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
3 _3 _! S4 G% H% Ppositive for the year-do-date, including high yield.: d6 G: ]$ m7 p1 k
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble8 }5 D$ s- @4 X" n
finding financing.+ M5 B7 g. R* n' G) o
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 Z% m; F k, C3 Z! k
were subsequently repriced and placed. In the fall, there will be more deals./ B% ]" W, V8 a) y0 ^
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
9 r& }) J, L, O0 d# T- \is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
! ~. S, d: d' igoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( K2 A% [6 r7 V1 E6 nbankruptcy, they already have debt financing in place.2 v! g5 }& \7 D) o& \+ _* Y
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
' `9 R+ ?9 O" N, {today.
$ r) z3 N, y% L3 z0 H Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
. P. f" x: F# u4 o0 Y8 F; \; Femerging markets have no problem with funding. |
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