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发表于 2011-9-17 13:16
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Current situation0 \ t( E# f: J, f; U- K
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
# |! h, i$ ~' N) Nas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. t/ b/ W( z* W$ jimpose liquidation values.6 X! ^1 h4 S L4 F
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
% Q9 s( f2 K7 t9 ]August, we said a credit shutdown was unlikely – we continue to hold that view.8 s9 o0 u, Z6 ~6 I( [
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
m7 t& S/ a" \" g7 Iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets. o- |5 U1 {+ z" O4 ^3 F2 z5 |( U
d8 \3 }! u9 R3 a
A look at credit markets
( }9 u/ j0 d) b" O Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 v0 o. @) T3 p0 p4 y
September. Non-financial investment grade is the new safe haven.* v* k7 u) Y& |4 V# h* v
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
, u0 h" `% `0 ] j, N: T8 S; z" Cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 G2 c9 F& [+ k, Ibillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- b% r7 d3 y, W* e* T l e
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade( E/ v! S& |) O
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
5 J5 F, \, D4 V6 ?positive for the year-do-date, including high yield.- p/ F# n- M! k/ G" J) e
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
) O2 [: ^2 c z% E; k, W7 ^finding financing.: B6 c/ `2 a, `, p2 E" q1 {
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they. e* G" a. C6 b8 F3 N) E* [# g
were subsequently repriced and placed. In the fall, there will be more deals." O' o3 h0 B! _7 Q5 @, L$ V7 s
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& r. M; }. K- t( G8 J: S' |6 d
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
3 @/ W6 P# H0 S1 u3 Hgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for! A, E" Z8 A4 b" f. q. v. ^" k: y
bankruptcy, they already have debt financing in place.% v) t% M2 c5 i! |4 B2 _/ X
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
+ s5 X8 e/ L: F0 Jtoday.9 J( n+ Y% b7 h
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
a1 l% ?0 N0 O( bemerging markets have no problem with funding. |
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