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发表于 2011-9-17 13:16
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Current situation
7 {! Z$ q8 W2 Y$ O The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
( i" R* C9 g7 N# ]# x! |as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
& ?! c4 F4 ?' T8 t+ n9 yimpose liquidation values.* W+ z8 h2 D8 b- L
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
1 |9 C# o7 P! V8 u- c0 d' y0 SAugust, we said a credit shutdown was unlikely – we continue to hold that view.# q- \& I7 r% d
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ ]; W8 x: U0 t, b6 m/ t3 Pscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
' B q: \; _; s. g Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- [5 J+ l+ D( z4 k
September. Non-financial investment grade is the new safe haven.
( X4 n; u& ^) `4 q6 A: i! x' ] High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%& t! u" W w! Q# u/ y+ |' C5 I, p7 ]
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. O, ^9 n; ~) y
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
- Y- k9 E- W$ ? L( l2 ?9 }access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade3 Y0 {) m( F; E( d9 x
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are4 n. W# _4 ]( O3 L6 b! S
positive for the year-do-date, including high yield.
! T0 W/ c: h* b& r, Q5 Y Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
7 q/ B( Q1 x: c& Rfinding financing.+ [1 @- }! U. R9 G7 o( O! u
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
6 s( L" w6 I4 a, E. b6 jwere subsequently repriced and placed. In the fall, there will be more deals.
x# N! p' {5 }$ f9 X Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, d9 N5 B. A3 _6 Uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were3 w9 D4 E+ m# M, h* H
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
6 @' t6 u# v6 ^$ O: A3 gbankruptcy, they already have debt financing in place.0 ^: e/ T) B, i) k4 i. p: m& t
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
$ ]7 J2 c, b& v& mtoday.
) }6 h: s, b( ~+ b( b1 E Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
; n. S9 I* i; {- @8 y( r; ~' y: memerging markets have no problem with funding. |
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