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发表于 2011-9-17 13:16
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Current situation
: V8 n! i+ m. u0 N4 S The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long0 G$ W2 ~/ D3 ]% B
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may( U4 u K1 c! P! Q- ]" V
impose liquidation values.
" P9 q S2 c/ H7 Y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In8 ^* H2 l+ B; t6 A& g( C3 G
August, we said a credit shutdown was unlikely – we continue to hold that view.
- A& c4 s4 s! r# h! ]) V! ~ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
2 C# C4 Z$ V! B7 m- a4 h5 rscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.3 c* n! o& g4 M( N) X2 L/ o
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A look at credit markets
) `0 i! y1 W2 |, t- y: A0 H Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
5 V, f+ s1 o$ c* ]! O5 m+ f% gSeptember. Non-financial investment grade is the new safe haven.
/ h8 B2 d Q- v/ O( u High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%& y6 m& I3 W, k: I
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $15 K7 `5 U+ F( M$ d- L7 G {6 U
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have u! o: ]. y Q8 F0 z$ L% y$ j
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade3 p. C3 l- {4 G: f% u
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are" D2 J( C5 O* {9 D
positive for the year-do-date, including high yield.9 m* `- [; }! t: r/ Y4 s
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble F( d) k* C) {) ]! }" W
finding financing.' r# |9 r" X5 _ R3 r' C; ?4 m4 Z0 U
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they. t( r6 f# @* e
were subsequently repriced and placed. In the fall, there will be more deals.
. V* G# ^$ C: c1 [ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
; l1 j8 ` z" {+ G! eis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
+ _& w7 e/ Q0 x0 o. r9 @( G9 p; ogoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
, q1 R+ M, E& r. pbankruptcy, they already have debt financing in place.
& y: O( a2 M( K h. X European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
4 j. I Z9 p3 j+ C2 S% ktoday.! | N& R1 P, Q9 R4 O- J
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in4 j# w9 p- ~) \0 h, m
emerging markets have no problem with funding. |
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