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发表于 2011-9-17 13:16
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Current situation; l2 ^! p5 q! m9 k* M
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ \! Y2 ]! O0 G: p8 @
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ E5 k }0 m2 m: {1 u5 Wimpose liquidation values.
G7 V" z3 n- B7 T In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
; l0 |' I9 V7 f7 tAugust, we said a credit shutdown was unlikely – we continue to hold that view.
4 d+ d& ^8 H- B* ?; D The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
, T( _5 X$ C/ i' Iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
/ R3 k1 U) y+ ?1 D2 k. ` Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in5 w0 z8 W/ P1 Q% ?/ o
September. Non-financial investment grade is the new safe haven.. F) ~1 a0 K# R; z* w- o
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%8 R/ V/ M1 b. z B5 v7 H9 B _& d
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
: E5 O) f" W% E" Pbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! @4 c1 ]2 h# G+ y% } G7 Z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
6 k6 M& {! b. I( G% t; K5 S+ e, D9 XCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
5 ]9 } L! W6 p; N$ X1 G" p6 J/ o+ vpositive for the year-do-date, including high yield.
; }5 _# t3 q) w: F) u, g Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
* u1 h8 F2 T* N! |1 p) B/ Jfinding financing. x) y( o% ~0 j5 r R# b1 r' Z
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they8 h: D4 h! r4 t$ f* x, }) V
were subsequently repriced and placed. In the fall, there will be more deals.
. i8 v" I* y* k Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! B w& h6 V4 z! ?' c3 W+ s
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
( ~) a5 I; o. I5 g' k, ^# zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
4 y) q, ~8 n" bbankruptcy, they already have debt financing in place.
. F$ L$ E0 @3 K. z. M, O European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain. s/ [; I+ a3 z: s& D8 q8 z8 B- A
today.
7 r& j* K# C [% X; B0 L4 i; | u2 o Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in' G1 j5 K: N( g! y6 L
emerging markets have no problem with funding. |
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