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发表于 2011-9-17 13:16
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Current situation
6 ~; ^( }2 M9 \/ ^ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long0 t5 k1 E! M% w, L) X# D* C
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may' R* I F% A* m) ` B
impose liquidation values.
; j. j; j" @* h9 x! g: v+ G9 h In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In* E# e7 B" S# b. U @! g
August, we said a credit shutdown was unlikely – we continue to hold that view.# v% u `: r5 s; q& j# t
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 x2 f. M! C# A0 u) i B
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.; N# d, ?% o* n+ r$ p* S4 c# T
: A% Y% H+ O' q" k. k2 e3 z0 zA look at credit markets
! y0 \+ _# H( {' c8 ?' ` Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in) T- ~& W3 n. K! v: d4 Q1 g" ?
September. Non-financial investment grade is the new safe haven.8 c4 Z) A S5 o& s0 Y5 x
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 @) b8 g6 Z8 B3 o# \
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
- |9 h' Q3 A0 F, D' Gbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
5 Y, V4 ^& {! e# I# z daccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade6 X3 C2 j" V9 y& ^8 P
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are C$ A2 x h/ m$ p5 o
positive for the year-do-date, including high yield.! l( m, y) L+ Y7 C& n2 b
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( G& E. K0 y* x5 Nfinding financing.% G- y. n3 q% E/ N0 Q# A0 l
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
* w8 U* g$ p. o/ L" t, T9 W* I( E, A- v1 ~were subsequently repriced and placed. In the fall, there will be more deals.% D' A& Q" X; S8 R; {
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 l; r3 C) T/ c! f" o1 G1 T
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were6 z: w! B I. G0 m, k6 I
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& R9 r5 z8 P# q
bankruptcy, they already have debt financing in place.
: e1 p: C1 s" `2 U8 e European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain! ^: z9 m1 ^ c; d5 B* z) l
today.
! R1 ~4 B7 o+ b- f/ s# q Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
, n2 s) \6 S& n- remerging markets have no problem with funding. |
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