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发表于 2011-9-17 13:16
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Current situation/ ~7 R. M7 f+ l% w. s5 b" s& g
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
) y2 R* Q6 ~8 y J' Sas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may: ?0 }3 s8 h- }5 N3 @# u. y8 j! u
impose liquidation values.* T' D! S1 U8 P) N; ^! X7 s
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
1 D6 i/ f* q5 n6 A8 iAugust, we said a credit shutdown was unlikely – we continue to hold that view.
0 t+ R X! ~3 m% E9 z/ A2 ^ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
5 c- H; k! o; G N7 [9 v+ E; Gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.6 Y4 X) ^! o9 {2 v$ r: K, Z- F
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A look at credit markets% r" i+ r0 K- H( W& r& p
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in! y7 ]3 U+ m5 g L l" D
September. Non-financial investment grade is the new safe haven.
/ v: r& E1 o# ?" N! g High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' g L0 i5 w9 O; l
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
! b! q& v. ^( D- o e1 Sbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have& k% T7 T8 p4 i4 E1 i9 Y$ h2 @% @
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade' m0 d( u, Q* W2 j! i
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are$ B& C$ B* }* C
positive for the year-do-date, including high yield.
% ?# E! l k: A0 U7 q1 T Mortgages – There is no funding for new construction, but existing quality properties are having no trouble" E1 z) Z; a- V0 s/ U+ m
finding financing.4 S, u/ }7 R, w- f% U& j* U7 x
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
- a# ?; H) G! R) V, hwere subsequently repriced and placed. In the fall, there will be more deals.: y0 u, @% G: {4 `: @7 k
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
o& d6 ?5 v" K% A' pis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 |" V e) }7 ]) S' _& Sgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for* r0 }1 b9 p! s+ u! }1 q
bankruptcy, they already have debt financing in place.# a0 ^9 j! u8 H0 o
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain4 I& y: C U2 @1 s% @( w" _( f/ }
today.
0 x( M5 R5 S3 M- }& B Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
]* w- I4 A% iemerging markets have no problem with funding. |
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