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发表于 2011-9-17 13:16
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Current situation
( ?4 q/ Y+ K- T: E8 U( S The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 ~' i1 {. Y% v# C* k, Las funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
" a( U+ F" g1 P3 Fimpose liquidation values.
* K; G! c) Z5 S In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
9 h4 B- s5 V$ N. r4 k- O, u& FAugust, we said a credit shutdown was unlikely – we continue to hold that view.
* J7 I1 G6 w1 R: ^ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 \. c: M' Y! d3 zscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.% P* r# X" i E+ X
3 V% t1 Q; e; ^$ E& rA look at credit markets8 x: {0 K, X0 }7 b2 Z, K
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
$ P) F5 ~. U5 J! R* a1 ]/ DSeptember. Non-financial investment grade is the new safe haven., v8 c2 G' m1 n+ F; f
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
& l/ Y: N" U5 T8 d) n0 e; Ythen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
' T' J- c3 Y$ ibillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( z1 h% V: P4 X1 V! L9 X3 g6 ?
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
& h; W% }. W8 G! p- q) z6 gCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are2 j% Z, K# f! \4 Z# N2 H9 p& X
positive for the year-do-date, including high yield.$ U- S. y7 M6 d2 w( K2 `) y: x" S& ^
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble* s- a0 \0 n, @, M& X
finding financing.: q6 f3 W8 W% Q
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ I+ g/ U: C+ l, @were subsequently repriced and placed. In the fall, there will be more deals.* Q+ O9 x- _8 i4 R: c
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
7 |7 l# D; N: G5 eis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were8 ], a4 a- H: ]( G1 x8 I
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 a) H7 Y5 m; F- w
bankruptcy, they already have debt financing in place.* y8 W/ ~7 u) t# P0 C8 e( I( i
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 k% u/ {# r$ S7 \% {
today.0 M3 j( s v) g9 K, B, `
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
% H; ~- J9 v/ ]5 g; f3 C& yemerging markets have no problem with funding. |
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