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发表于 2011-9-17 13:16
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Current situation
# M6 j" C# d0 |* l The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long* x- s) M( \! j* W
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ g: |, A7 e/ F0 P5 H! I" Gimpose liquidation values.
2 {+ N+ a* n) k- J% c D8 q In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In+ Y) }% g* `. H$ ?
August, we said a credit shutdown was unlikely – we continue to hold that view.
0 ^. s3 m. T5 ?: F' U The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ v$ c/ M! F1 J& X2 a' w! E
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* W& G$ Z6 `0 O w, z! Y# ^2 e
1 d; m4 h% l: eA look at credit markets
2 ~; n5 v5 ?: @4 ~( y Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in! f: z; f. D: T4 a0 n$ Z
September. Non-financial investment grade is the new safe haven.
+ X; @# Z; w/ @( }% J+ J$ U. y High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%) M0 p8 G8 p9 T+ K) \7 C9 J
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
k" C8 e. Z/ p/ u( W% i' bbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
7 T8 G/ `5 G- J1 ^: Yaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade4 ?8 ~' N+ ]5 {% s$ T0 d( u
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are2 z% ]$ ?; n2 ~/ [% [
positive for the year-do-date, including high yield.6 Q. }$ T# ]2 Q1 \5 f
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ K1 W# d/ a+ G
finding financing.. i3 E. n+ z% Z6 J) i
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ U; g. t$ D8 }" x2 G2 Dwere subsequently repriced and placed. In the fall, there will be more deals.1 E) ^3 [. N* I' F9 J
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
5 b7 R2 E: \- ois now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
- A& k& y W& I v$ r8 mgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 \6 m0 x9 j1 P
bankruptcy, they already have debt financing in place.
* @' J3 P0 l% R2 k/ ~3 z European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
m+ I, i% `) ^% htoday.3 a3 w, D. S+ d, J5 E- \1 n p
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
) s5 |9 {0 g5 L. Remerging markets have no problem with funding. |
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