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发表于 2011-9-17 13:16
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Current situation
6 D: G2 H: u. O m( g) y' s The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long2 S7 K7 U" Y9 J
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. z, p: Q) F. _$ H
impose liquidation values.# m# _- ]/ B9 M5 D
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In! N8 z8 }+ t3 o; A6 z% B% v
August, we said a credit shutdown was unlikely – we continue to hold that view.
$ O7 s6 f; P0 Q+ r( P The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' }. F3 y# u& }
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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. t, `6 h9 y: T- k6 gA look at credit markets
8 O4 p3 L) i- M& g7 B u Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in) O9 A1 B' Q' `( b2 C; a3 \- _
September. Non-financial investment grade is the new safe haven.
/ L7 j" X% p: |+ Q0 |$ U High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! Z2 s, n$ o$ ^; d; |' O c0 fthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1- w( s8 t9 x% S; I% ~' n4 T9 v8 p
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
2 @8 N. D* P+ K. k2 H" t& C& Saccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) n1 e, w3 z9 `1 c B! X
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
/ \; H+ m' i5 K, ^: qpositive for the year-do-date, including high yield.
+ d, W6 P5 q. B0 x, c- z: _ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
9 K' ?( F" r# j& f+ Dfinding financing.# b) T. p2 L7 P" p5 u& z4 ?' r
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they; z8 U# y$ d9 S
were subsequently repriced and placed. In the fall, there will be more deals., C+ D7 N0 |! `: ^3 u! c
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
) |) n3 Z) t7 t$ j( D- Bis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were8 m8 ?$ R- P6 e1 B9 P. c
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for J" }: \9 o- w' u% p
bankruptcy, they already have debt financing in place.
1 ~) \ ]3 F4 C7 o4 I% Z. O0 B European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
( y: K8 B. n( N& }4 j4 p) ktoday.# `6 F5 u- q2 [, a* X1 {; X% q% Q
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
0 D4 K0 h) d$ xemerging markets have no problem with funding. |
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