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发表于 2011-9-17 13:16
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Current situation
% K& H6 K1 i8 r y0 f7 v The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
$ g7 e; Z$ e0 B. i9 D/ nas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
8 A4 B, p* y& g. W& p# Qimpose liquidation values.
+ |+ G1 J, r, V% ] In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
5 a V/ ?) M1 ?2 R( j6 qAugust, we said a credit shutdown was unlikely – we continue to hold that view." \8 ~. H6 B' O$ k
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
; R& i. o8 L; |# I4 rscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets; c& w2 b, s* f5 U- D
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in9 Q. c6 r8 I/ W/ t ~9 V1 G
September. Non-financial investment grade is the new safe haven.0 A7 ]' I0 q# i$ m4 D- K. Z2 W. q7 h( V
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%8 s% r L3 s5 V6 \, t
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 ~( e- A. C& t/ v- ^: Kbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
; y4 ~' S; M! i1 `% b- a7 \. k4 kaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 J m2 V4 x" E8 T9 }' q. yCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: h Q4 H+ a- h- L
positive for the year-do-date, including high yield.# G/ \' n8 g/ i0 c' s) O; Y3 ~$ R0 @
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; B: H* j* v: A+ m2 z, Y: I
finding financing.; ]7 B1 ^9 q8 o. g
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ {/ h9 k1 Q) U0 swere subsequently repriced and placed. In the fall, there will be more deals.
4 O! E G: S+ {' c2 s3 x Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and7 h! l$ `( I" p8 p
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
2 {' S3 T; V" j4 t) L4 b( i9 ~going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' S2 ^7 p8 c4 }$ t7 ]& b
bankruptcy, they already have debt financing in place.
( B: x* N( D* D8 m, Z" g European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
o+ B3 d& e j0 Q! S% Ztoday.$ v$ W9 U5 G2 W/ C1 x$ o& e3 E, O
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- E) q4 P5 D$ f) n3 q
emerging markets have no problem with funding. |
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