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发表于 2011-9-17 13:16
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Current situation
$ {4 ]% b# U! u! m4 P0 M: k+ f$ t! c4 m The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
0 O; D! ?/ w7 m/ V' t# tas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may# l3 m/ b* v2 p8 n
impose liquidation values.
?& r7 H7 k" t In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In6 m! Q; X- V' k+ M7 [
August, we said a credit shutdown was unlikely – we continue to hold that view.- B6 [8 c* y% F1 s% k
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 [3 L) ^/ w- z- I% b3 A
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.4 D+ n/ F0 q6 s7 x$ R2 O
! E. A. n7 \7 D5 e
A look at credit markets2 k$ ^% f/ E$ _' t" e
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
" i# \. e2 U# T9 h) Y' ?/ m* ?September. Non-financial investment grade is the new safe haven.2 \& s; n; E2 ]' F% ^8 a, A* P. w
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%2 J* @- y0 s6 Y: K* ]- u! i: z
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1% K( p, Y# ?! I/ q# l
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have H9 { v- y8 A+ H, b3 U+ A
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade/ y* a* z0 m- o4 s! Z
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 n- v+ `% x; T5 m; }
positive for the year-do-date, including high yield.
8 d4 {, Q: m0 V3 y3 u Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
. K, w/ E! Y/ V9 u: k0 a7 Ffinding financing.$ o# X1 Z) {" i2 M; A
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 X# a1 ^$ p/ C) I1 d* n* m5 E3 t
were subsequently repriced and placed. In the fall, there will be more deals.
( ]5 D b: y: b Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and) o+ a; u% b2 W0 r$ m( A/ n
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. b, }& S* w. h: {$ zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 \" x- S2 e" d/ }
bankruptcy, they already have debt financing in place.2 v& ?; u0 `# v, k
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain" l6 X, @* U6 `0 }& A. h# _. M6 N
today.1 j# C4 R" F* A9 {! R
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- d4 u |& t `6 q
emerging markets have no problem with funding. |
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