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发表于 2011-9-17 13:16
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Current situation
5 F6 A' Z$ h' n, g( t4 H0 J1 { The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
0 `% F5 o7 h- P# b* Tas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may5 c3 D& j e1 h/ s' i" i
impose liquidation values.
4 j/ u/ x5 t% O0 }) s% X" S: H$ q6 R In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In( D' K# G- R/ U( v' P
August, we said a credit shutdown was unlikely – we continue to hold that view.
0 w9 `( O& x1 k4 ~( | The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
7 b \! n4 w5 B" Jscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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, _/ ~$ O S- c& sA look at credit markets1 `% p: c3 c- X8 L8 l/ e5 v1 F
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
~: e" W" J) [5 ~0 U$ }September. Non-financial investment grade is the new safe haven.4 `, A( }6 n( w+ X% E9 K4 n
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
9 M) C% t' o! [9 @) X' uthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 @, G( k Q! B
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
) E0 S) l) r5 D; L8 u( c' j5 ~access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
8 z% w4 q6 A0 k1 |5 U& ]) A+ C7 aCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 g3 g7 K! {4 f& C3 B9 R( npositive for the year-do-date, including high yield.: U, }& w. C5 i& w5 W$ j% r+ M8 y
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
; S2 N& P. Q, Jfinding financing." U# | u' U$ n2 @7 s5 c2 y; T6 D
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
' b* W A, H2 u; w! zwere subsequently repriced and placed. In the fall, there will be more deals./ K0 I. A* l! C1 V
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and" K# G& I/ O# }; f/ o. r( g' J$ G
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) K1 L% A& k. a5 d& R; w8 }. lgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' Q2 c8 x8 _$ F: P' A) o- u) V
bankruptcy, they already have debt financing in place.4 I% Y: ~1 {- e. v+ w
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain9 s$ I5 X; m. E9 |0 x/ A" j% K, W# n
today.
* s D* r, |( ^$ Z3 q( m Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in6 p+ P6 e# [0 w5 u/ U% q6 B2 G, b
emerging markets have no problem with funding. |
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