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发表于 2011-9-17 13:16
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Current situation
& X+ I+ D- e& v% G The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long/ o8 \0 g# H* {& F P* O
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may3 ?! W2 z8 i, o# X# R5 b
impose liquidation values." [% J& [4 D+ C2 O( x/ s
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* y2 K( J, o5 ]7 m! Q) }" w( uAugust, we said a credit shutdown was unlikely – we continue to hold that view.
9 x y {( e& N* Z8 L9 E The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension/ e3 h" n' B+ i, s, n8 t
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.6 t' A0 e6 V ]$ z& z
+ S( l/ _5 u- ~1 jA look at credit markets
& G3 {4 k+ y6 f Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in( _1 f$ Y+ }# {1 A. P: I
September. Non-financial investment grade is the new safe haven.
6 s' Y% k2 i- }1 C High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 ^5 B( E: D9 {* j9 ?/ N' b
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
5 O+ o% @8 l, c! kbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
5 r: U: X3 ?: f" U& paccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
3 f2 ]1 y9 {) p+ X. C# ?6 x& JCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- e% K% R. A9 i) |3 \1 U% t% upositive for the year-do-date, including high yield.
+ d, c$ X+ g, b2 q4 P Mortgages – There is no funding for new construction, but existing quality properties are having no trouble3 @! o0 X: C0 e1 D9 h6 `& }! d
finding financing.0 |9 _# L; i, ]& N7 \
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they9 n" z0 U/ T9 p0 ] e
were subsequently repriced and placed. In the fall, there will be more deals.
( _, P% q8 ^! E _! K) a Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and/ I% y* d7 [- M3 W; U- k1 k! Q
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
?% j' h8 Y q v' w! T1 K9 mgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for. ?1 F B7 i- J; @) Q$ q/ h6 o
bankruptcy, they already have debt financing in place.8 a8 V9 }. Y) x1 X5 k
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% w1 p3 K, t$ d/ B4 K
today.: Y+ I4 x% f+ }9 d" M
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in5 E2 c' o! M- X4 H; L) W6 n" v9 L0 v9 ?
emerging markets have no problem with funding. |
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