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发表于 2011-9-17 13:16
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Current situation
& G5 d: ~- N+ C! ], u The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& c% L: A0 k; X* M3 _9 yas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may! y+ u8 E. ]* V' [! Y; l% a
impose liquidation values.
1 ^* f/ K Q/ m$ R5 n# T In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* O. { x+ J0 y% cAugust, we said a credit shutdown was unlikely – we continue to hold that view.
& x+ u; e6 s1 x/ f$ I9 w The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension3 o* N7 r; _3 B' \
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.; G5 N6 g3 Z* L& N: O
( t+ x$ N0 z1 NA look at credit markets
; n1 s& k1 z' Q/ P- [ y3 ?" h Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in+ ?. s/ C% p# Y. M- c
September. Non-financial investment grade is the new safe haven.. U2 W4 i% I0 R4 [' B# S
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
+ K9 i$ S5 G; e6 J3 Uthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
9 [! m2 h# ~+ R2 K0 U1 Dbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
! X1 J" ~7 a5 k* V1 L! g5 Eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade+ Z E6 I6 w& i8 a. v
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 g9 X( P* M Q" j$ L1 z. D, zpositive for the year-do-date, including high yield.
# D- N/ _4 L2 O) N0 x% c# M( Z Mortgages – There is no funding for new construction, but existing quality properties are having no trouble. t" h0 J7 f' x2 H( u$ z$ M
finding financing.& M5 g" Q! ?' y- q# J! N
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- {' r4 b9 z3 ^% y6 w
were subsequently repriced and placed. In the fall, there will be more deals.% W+ V5 N8 H8 z& {! l! f @
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
4 {% W9 s* S( C7 M$ c, pis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were* o& z) Z7 h" i+ H7 x$ } N. }" d/ W
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
2 l% p; c7 ]5 Z1 k6 C3 Ibankruptcy, they already have debt financing in place.
3 @ C' g/ u7 c9 [- ?9 `: h+ M+ {; Q European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% w+ _) ^% S# |
today.
* J1 Y' e/ f6 {8 {3 c$ _0 M Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: C) U ^4 H- ^) b3 b/ b# M
emerging markets have no problem with funding. |
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