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发表于 2011-9-17 13:16
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Current situation
?6 x7 q# A8 m; t( U7 n) Y6 ^ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long6 W6 d9 i) z4 @- k t
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
7 N: Z/ W+ H8 Fimpose liquidation values.
X/ V, L, J9 f" i: w In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
8 d, _9 G0 z2 U% O4 NAugust, we said a credit shutdown was unlikely – we continue to hold that view.) q7 _6 f" O9 o+ Z& I
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
) @3 W6 u, |& {! Yscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.$ g6 Q& C5 I C3 @' o: }- f
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A look at credit markets
3 b% e, H; X( n9 {' i0 e8 f- D6 ^ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in! n5 h+ L2 Q# v4 ~2 |
September. Non-financial investment grade is the new safe haven.. k0 K) A7 @7 W
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 i1 P- e$ n+ K. E( ^* Z$ ^& n
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $19 u. t. g/ s8 N, l4 P2 b E
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have+ ^ h, Y' M) C! ~( k# N4 ?0 S
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
3 Y1 ^, F3 k4 \& {8 f0 ?# tCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are' i. M; e; y# \! D
positive for the year-do-date, including high yield.$ p% q. ]9 }3 O6 x ~
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble( b" N' l, ?8 q p9 H0 z
finding financing.( P/ i* f0 {/ K. t, {
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
! g/ l+ I$ N' t D- b) vwere subsequently repriced and placed. In the fall, there will be more deals.
9 e$ P2 u' X0 [ v+ {9 D, }- m! r" W Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and0 @' S6 I# X2 Z4 b) g( O
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
j3 e2 w# P7 T6 B7 Dgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( k/ Q- y" {/ _: ubankruptcy, they already have debt financing in place.
7 m1 }" o' }( l* F% r+ ]! | European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
# ?6 ^4 O% s/ i ^$ j+ n' xtoday.
/ x9 H8 W/ l/ q* g; `+ w4 ~ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
% `3 Q1 J0 j1 J8 Y; M# q. ~1 eemerging markets have no problem with funding. |
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