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发表于 2011-9-17 13:16
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Current situation; o, z, H! k. D
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
* g7 A2 D9 B, x% v" Fas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may5 N+ Q4 i. E+ _! p- q- Q
impose liquidation values.* |3 U" a: _7 I& N0 V4 o
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In* v9 m/ e& I1 I& J' J
August, we said a credit shutdown was unlikely – we continue to hold that view.4 x Q7 x$ h2 h; }, _! L7 e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension/ q/ P1 D+ k9 D/ x$ c8 Q
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets: c2 y$ n& x0 T8 U. S8 |
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
* o7 g% S: c/ H% |" ~% NSeptember. Non-financial investment grade is the new safe haven.% Y1 f" w2 ]) v+ R- v
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
/ k6 F& y$ V; y# j4 U" Q3 D2 [then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: {9 I: q! M- X! p
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have) G. H$ N: u# N
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
* [0 b1 D2 s' uCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
. Y# E, Z B! m9 W) W6 o; Tpositive for the year-do-date, including high yield.7 `. R9 p5 ]# U# j
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble" f8 J) f E& d( G! l
finding financing.- p8 G6 p k2 a6 {( B! Q
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
! g8 F- n; S& K( Y5 ewere subsequently repriced and placed. In the fall, there will be more deals.% q; a/ p. O/ I; _
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, ^- s% m6 O: x3 Y: x: O1 Qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
6 ]& J; j( ~" K; Dgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
/ k- F( l, g$ c9 ^- zbankruptcy, they already have debt financing in place.
& R, S5 k1 W8 a1 ^; z0 G9 U/ d- T European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
2 ~' j5 N: t4 Z! Ptoday.
( ^. N1 V& G( X- A! o" T Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in1 c4 c: ?$ c. l( S" W z! s. T
emerging markets have no problem with funding. |
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