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发表于 2011-9-17 13:16
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Current situation
9 q( p- g1 a9 D7 P! P The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 W. h& }' V+ V8 a4 c
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
K; L* ^: H! f) q; Yimpose liquidation values.
h% ^& B# t' K' J: _8 o In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In4 J! V* A% w' q3 ~/ O
August, we said a credit shutdown was unlikely – we continue to hold that view.: e& d; _; T$ J1 S) `/ l+ j3 x2 @
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* u" I1 ~3 h4 x6 s; t2 V
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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" V* [' u2 j) f. [A look at credit markets" `+ v' E$ ]# ]4 R% ]
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in2 ]' G/ j* {4 D/ ^+ y/ |+ l( n7 J/ C
September. Non-financial investment grade is the new safe haven.! `: ^9 C/ Q9 `5 O8 ^- a8 G
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
4 `( ?; M3 M' d6 |% M. Sthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $14 B% [8 p% g2 E: `. R3 m/ f1 m B
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 D: R2 |, C, t. ~( G, k
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
. S! W+ f8 y2 r" ^CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are' ~7 C8 V1 B2 b8 t \, e
positive for the year-do-date, including high yield.
; J' t4 t; }6 J( a3 u6 C& O, K Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
& N, U1 ~! u/ yfinding financing.' g, L5 [6 c1 U$ \
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
- `- z" z- K9 N9 B2 N0 fwere subsequently repriced and placed. In the fall, there will be more deals.( }5 t* H( E# l' l6 P
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* J) |; |" u+ W' v, i+ Eis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 ]: v/ D5 P5 ?% Z' ^$ Igoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for- G3 R, }4 L1 R* w! W
bankruptcy, they already have debt financing in place.4 w8 _& R6 |+ O& l
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain. ]+ ]/ W) n' J7 f& T% h7 [
today.0 M2 K$ S' u9 @
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
( r+ w$ L$ Y w( ^emerging markets have no problem with funding. |
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