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发表于 2011-9-17 13:16
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Current situation# w- |1 M/ V# n
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long U8 V- p0 z9 F" n
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. X; O5 b3 e7 a- f& Eimpose liquidation values., f. ?; ~" Y. w$ L+ @7 ?4 |( ?$ ~* w
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In& v! K4 ? O/ h8 ~; l( O0 w
August, we said a credit shutdown was unlikely – we continue to hold that view.
( F8 T j6 } L5 K The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
+ ?7 `6 b; S P0 J( j' `! Iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
" }7 U/ e w: V% F7 W Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in a& ~- _7 v4 M1 T( U" N
September. Non-financial investment grade is the new safe haven.
) l6 t/ A* c0 \# D+ Q High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7% \) R/ ]% }, t" s/ ?" |1 s6 B
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
6 q% G% K, h7 s5 m3 I- K4 ?billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
7 }* Y3 K' I% [8 maccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 P' \5 u } v# L
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
7 s( B6 P4 B/ s `% K: W+ Tpositive for the year-do-date, including high yield.7 [7 _# h0 s" C7 ]
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
# d" R- T5 f" Ifinding financing.
/ q6 C0 ]2 b( l7 ?. [4 H0 Z- J Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
9 G; \7 g @( mwere subsequently repriced and placed. In the fall, there will be more deals.( B8 f! z: O/ \- J4 r. x O* b
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* [- ~( W2 s6 a" C+ R5 G; L7 ]
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 ]1 M/ Y3 N. y- X$ dgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for( f" ~# a1 ^0 ~1 Z Z9 t1 e
bankruptcy, they already have debt financing in place.% a( Q# k& W# I3 {+ ]2 q0 m4 z% |" l
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain- [. _( E& ^( w% g
today.
) @3 I7 x1 i: C6 G$ F1 x5 m# W' A2 K Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: ]2 j4 @; p) x' x3 ^( _8 y
emerging markets have no problem with funding. |
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