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发表于 2011-9-17 13:16
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Current situation
( p4 J# @# j- w+ ? The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ A" q. r$ Z! S; Q2 [
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. |9 B+ Y( ]& y8 Y% P
impose liquidation values.4 W& v4 q6 I( U/ f
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In6 }! R3 n/ R- Q
August, we said a credit shutdown was unlikely – we continue to hold that view.; Y* B. n5 j% M' w% ?
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
) T: D& @$ s @& x1 K. i9 N! A2 Uscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets8 |+ U. M8 X3 A0 Z
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
% [& F: t& C/ A @September. Non-financial investment grade is the new safe haven.0 q5 H3 ^) H1 e7 B( w2 h' u6 \
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%. k2 V2 n& Z( k( B( J& N
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. J; |; [7 X+ g! m! _/ K
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have1 X) h# `, z. x, f
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
# T* M+ c- ^4 J: _0 L4 L* w$ UCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" L" U/ }2 ~* }4 X( ~! n% Epositive for the year-do-date, including high yield.
) l B8 z* W& M: y2 i; U Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' `" W+ C( Y0 W4 o6 S/ i( jfinding financing.6 g7 @% K" O, R T2 p' O: |) l, r
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 S/ Q( y2 U; h( j7 {- j
were subsequently repriced and placed. In the fall, there will be more deals.
, H" k, e! d# z' J Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
/ U, C; ~& O& r* |is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were" _! B# {0 w, _# ^
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
+ u/ a& O0 L7 D& _bankruptcy, they already have debt financing in place.
& v" f5 h L8 \' ^# { European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain' G+ j% Z* e0 Y/ O" o3 l# f& n
today.
9 Q1 m1 y9 K7 t" }! \4 J0 _ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in5 D8 O7 Z5 D& |$ |
emerging markets have no problem with funding. |
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