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发表于 2011-9-17 13:16
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Current situation
# Z+ d) j$ _8 a5 ~ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long/ N/ S' y- O* n$ C- p( H
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may7 ]% I" j8 o0 B* b$ U9 m
impose liquidation values.
6 ^& j; u' w* B, z F In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In Y& t2 \/ z I" S& @) G" a J
August, we said a credit shutdown was unlikely – we continue to hold that view.
# M2 B) \. m- Y The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 s g% K& c* c2 t& P
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
/ J: R. S) M6 {% }: e6 M1 |% M& ~# i% k! x+ A- @6 v4 _
A look at credit markets
! w! c% x7 c2 b9 @ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
! a. Q8 t5 E9 cSeptember. Non-financial investment grade is the new safe haven." x% [4 d- }! R5 f6 T' J3 g1 `
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
' i. ~8 c8 L" e4 b; Cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
- i* l$ |. X1 X' N' y3 B2 P! o8 sbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' `* U+ m3 D) @& ~* naccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade( p7 T0 ?( j B0 G6 n) h# {
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
/ ^1 }4 C3 w" u0 F- ?$ ]positive for the year-do-date, including high yield.
) o, T+ S' F1 c- K% L Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
6 Q7 G! T: W2 N# C! u) Dfinding financing.
; K6 x/ P. _; ] Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
6 }6 S9 Y" l, S% u0 @ I2 `were subsequently repriced and placed. In the fall, there will be more deals.7 d; {2 B: F# o* z5 R
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and( ?. u( R' I- s3 n7 j
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were0 B1 h1 s I/ A
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
/ T- {! U) f( Abankruptcy, they already have debt financing in place.
% O+ l# S% H/ _/ l European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, o, Y' v! F5 G6 F4 X
today.
5 b; B! i+ g* @( y6 T U Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& h5 p6 Q1 O$ y: }9 D6 }emerging markets have no problem with funding. |
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