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发表于 2011-9-17 13:16
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Current situation
& a, Z$ C* G2 M1 u$ A7 W The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
3 S. Z* F# Q1 g0 ]) Aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 y1 V; U) o. u2 q) N2 L; V# kimpose liquidation values.9 I& g* R: l* U* ]; B6 m
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In' q6 Z& M. S* {1 V
August, we said a credit shutdown was unlikely – we continue to hold that view.
7 {3 H( ~3 K& S4 R- H The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
& r: ?) t& d$ s5 ]. p- @9 G& }scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.' s5 O( I& b' U- T. G# u% a8 d+ H
8 ~6 ?8 w) ?+ }0 l$ C, S+ d5 R
A look at credit markets
% s+ g5 i, ?4 @3 e' W Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
% o$ Y- F4 W$ T: A+ K7 h6 iSeptember. Non-financial investment grade is the new safe haven.' D: N6 _$ z2 k4 N
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
% |) ^6 o/ v' e" V" uthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1' h& W7 W+ [; L. ~
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
9 v, Q" Y) D" ~6 ~! a# V5 Saccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
3 C! ^+ o# Z* O7 S0 W- ECCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
6 x7 k/ G6 c- B6 vpositive for the year-do-date, including high yield. N9 Y$ v% E1 {* b! X
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
: A h4 x( g- a, v6 Yfinding financing.
- v- g. K p8 [0 u# \8 _( ` Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- ]- Z/ R A: e
were subsequently repriced and placed. In the fall, there will be more deals.0 l6 R: V. X0 d
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and3 L: G! H, H I( A
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
# X: L, S, W3 U% ~. x* ~) pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for) \4 t) h( j9 v( B0 F4 c
bankruptcy, they already have debt financing in place.2 d% o9 {6 B4 E" r
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 I1 y" @! d7 @% x" A0 |/ t( d
today.
9 {# U$ t5 U8 M7 A Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
4 C% z1 k# K i' E& E$ F3 Qemerging markets have no problem with funding. |
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