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发表于 2011-9-17 13:16
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Current situation3 Z. A" T; v# u+ m8 I
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long+ X( B3 y* a1 n: t
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
( T1 Q0 M- g$ E6 p9 _' Oimpose liquidation values.
8 N5 T4 V: e G; I9 h In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In- I+ X- b o3 m$ d6 ~
August, we said a credit shutdown was unlikely – we continue to hold that view.
3 L! b; b5 A! O2 A* c9 f The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension( O0 s, o3 g3 x* m5 f) z, P
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
5 }+ }8 y2 l# u/ d* }/ x; t Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% c- z! V! c( y7 l6 G
September. Non-financial investment grade is the new safe haven.7 s: z- C/ i( b+ k
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! A& T1 u5 z9 q$ s6 B+ S
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1& M# W/ d/ _' H, }- V- x) ^, g
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
; {) ?3 h$ {, E4 Jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade0 ]) \$ [" J* x! Q2 K
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
% ^3 w. c) I, {5 }6 J6 Fpositive for the year-do-date, including high yield.
/ \ h, { ?6 _2 z4 m Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( P2 E. E- S+ l& Lfinding financing.8 S a0 L- X# J4 U
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they' v4 C* a: E2 e( ?
were subsequently repriced and placed. In the fall, there will be more deals.& l; h7 I7 W6 A4 z6 G0 l% m4 Z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and' G) o8 O Z$ ~3 o9 m6 D! ^. h) J
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' C Y$ M. g* i2 G
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for+ z; g* |/ c l5 }
bankruptcy, they already have debt financing in place.5 s0 }; ` @! |2 _9 X
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain; W5 g2 S' I% p! h, ?
today.9 {4 r, S0 {7 X w7 {$ Y
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 X! L. a& _% e7 H0 T; Femerging markets have no problem with funding. |
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