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发表于 2011-9-17 13:16
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Current situation( i4 U/ F- f) E( X- ^4 `( o4 I
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: B0 h! @2 [4 y$ Y+ w: @
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 M5 f! X+ l! W4 q' g8 Z
impose liquidation values.: v' G. A! F/ \! \7 y8 X) m) X
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 P; t! J5 b9 [6 pAugust, we said a credit shutdown was unlikely – we continue to hold that view.) {3 F4 b ]6 C0 C" u
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 `* u, [2 d6 o. G$ |" l2 Vscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.1 G6 o0 Z$ n! S9 v# N1 w. K$ w$ V& ~
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A look at credit markets" n+ l6 \# n1 F+ x
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- X2 d" h% q0 |7 k* ~5 H; s" v0 _
September. Non-financial investment grade is the new safe haven.
5 Q) B+ ]. ^, ^, ?' m- O/ j High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 B" ?4 ?5 E* S. x' R8 ~, H
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1* [& U K: L2 r3 m
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have8 E4 X& J m' B0 q+ f
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade1 o G% l0 W2 [* }9 ~; i) ~. q: E
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
# b( j0 ^9 {) N/ [0 x) ]2 Cpositive for the year-do-date, including high yield.
! p2 `4 W" f9 e* ~. q Mortgages – There is no funding for new construction, but existing quality properties are having no trouble& s7 B: i4 x" s2 K& Q. l [8 b
finding financing.
' U1 S: j; Y4 F, n5 Z$ W Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they9 f. U) @ U" r5 ^. K& E
were subsequently repriced and placed. In the fall, there will be more deals.- b+ \, p1 \* A4 {6 q9 k/ N. g1 z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 E5 |/ f) ?$ G9 c4 O9 @is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were) N( d+ s# a) H. P. t# C- D9 N
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 m0 @$ D0 W2 S% d0 G# c" X
bankruptcy, they already have debt financing in place.3 B' O4 i( R4 D# N0 b' Z" u$ j" @/ K
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain1 o* H& v+ k" A: O
today.8 R! L$ ]: E1 t; y# i% x
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
8 @% S; m( Y# Q# u, U8 U# Pemerging markets have no problem with funding. |
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