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发表于 2011-9-17 13:16
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Current situation
' W& e( n) u5 I The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long; \( C3 x; o! F) p! ?: u3 {1 o8 S1 ]
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
; U" s4 H) z3 l1 M) H) limpose liquidation values.; v) ], V J4 t! {/ v
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In3 ~3 |- U7 e1 {1 A5 u- H* R8 M
August, we said a credit shutdown was unlikely – we continue to hold that view.8 l: g) O4 O: `/ w* Q d! G: o8 |
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
R1 h6 T0 B6 Gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.# X0 {7 Y. i5 \4 l! n: I! H# g
# n+ D; G/ t: v- H2 ^% m9 u$ m; h6 M+ RA look at credit markets
4 F( e- u$ X6 h1 m0 h- ? Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
/ O- w0 c" n e' y: `8 zSeptember. Non-financial investment grade is the new safe haven.& ]/ g9 w. C' q2 J8 G
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
* M! K$ @$ ~; `$ H Lthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $16 O* ]. \' n$ {- y, S3 d( g2 e
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 d* ?6 @* {+ o+ z$ l( s. ~" o/ E
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
$ ~& i2 R" L9 V& S5 p I2 d& N9 XCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
@7 f1 t$ f5 q) x1 S; ?) r$ Mpositive for the year-do-date, including high yield.
p5 X: r- \( z/ T Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
& V) H7 G) G/ b6 k/ ^$ y2 ]finding financing.
% {: H7 E4 R9 A* _& Z Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
# N5 f0 `3 c& ^6 m Dwere subsequently repriced and placed. In the fall, there will be more deals.
% f: c" @ e/ A4 i& P! n Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& s) i( O5 r6 v, w9 H/ U7 J
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were2 y) X: ^% I. b* N6 ?: {4 i
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ c8 |8 Q; ?' t) V( {" _ ]4 [bankruptcy, they already have debt financing in place.
+ O1 g. w6 x- W6 `' n European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
. |" A; E+ e3 z- }. `' [today.
5 t! S* N0 @( Z7 k& k Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' V; B3 M- U5 }" V6 jemerging markets have no problem with funding. |
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