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发表于 2011-9-17 13:16
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Current situation
* I# f. h F' B( { The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& l6 }7 I% {. g6 b7 N
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* O& G/ o) E: l4 R0 v/ ^4 W1 K
impose liquidation values.
3 @& u9 q a% x" D/ ` In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 g4 A2 @% Y4 ^2 FAugust, we said a credit shutdown was unlikely – we continue to hold that view.# {& a. z c. z" N+ s/ V: U8 H& d
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
- Y0 `0 x6 [% Jscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets." i, ], q% {! L- t/ ]' l! U1 n
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A look at credit markets N5 N1 l* Z/ Z6 q# f; \
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
( f6 R6 S% ~9 O z/ L' ESeptember. Non-financial investment grade is the new safe haven.& Q8 n7 l; i+ K6 q" ~, N
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
. j" k( S8 R* D* \then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $13 U( f2 \" [& J
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, F! h) Q; K6 B3 Zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade" w# _" c2 k& P5 i- j3 ?
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
_4 A7 n+ H; w% Bpositive for the year-do-date, including high yield.
& L" D8 m1 v" x* p8 b Mortgages – There is no funding for new construction, but existing quality properties are having no trouble, }3 n. u2 }( M; Q" B# t
finding financing.
, ~7 J6 k1 }0 A' o Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
* m5 T- w& P) x pwere subsequently repriced and placed. In the fall, there will be more deals.
5 x. c+ L# O4 G4 b, c Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 s6 S/ d# ~+ }0 H" z8 c8 e; fis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were) G9 A; u2 C; n0 F; @
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for* Y& q$ b0 F- C1 n
bankruptcy, they already have debt financing in place.
+ m4 f6 m- A( _0 E European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
/ F5 f1 F# X# Ttoday.
8 o& L& m2 @, V& b2 P: N: g Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in2 g! y8 {7 C h2 q d9 e
emerging markets have no problem with funding. |
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