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发表于 2011-9-17 13:16
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Current situation
5 Q4 Y+ u s3 \- t. f6 @- Z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
0 v$ @ h% N5 h! V' l& V% ras funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
/ P+ A& y: d6 S. A0 P8 Gimpose liquidation values.: j5 O' g, Y, I6 I
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 \! H: \# N6 u8 k/ q `; w
August, we said a credit shutdown was unlikely – we continue to hold that view.
p4 }' b3 y, g/ ?2 C3 |# G. z, G+ d The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 m! U6 l" g0 N$ `1 R3 K- l9 oscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.% I. A" n1 u' [6 r
( w, ]2 j* c8 v3 xA look at credit markets
0 d' |+ E& Q/ e: t Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, K, g. ^! A) u4 c2 xSeptember. Non-financial investment grade is the new safe haven.; d+ B5 F6 M8 _; I/ S
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%+ p$ k5 A/ s' |$ z) o% c( g! P! A
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
! e6 Q) Q" B# hbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 |* I: ~! T9 Xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
* {* m/ B& E, u: L7 xCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: n& F: y, ~, q
positive for the year-do-date, including high yield.% n' W3 p' B: T6 T& _
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble2 o6 K+ }- G. K3 h
finding financing.
- h! U. G$ y# E S' }8 \ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
/ L2 i' B% Q% c) d0 X3 uwere subsequently repriced and placed. In the fall, there will be more deals.
# i5 h1 r2 ~4 V8 I Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and0 J4 A( I( ], ^& G( @
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
* w4 w. }" `+ L0 P! p$ m) zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for1 h5 {. d: N- e
bankruptcy, they already have debt financing in place.1 |5 p# i. K: h; ?! i7 [
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain1 P7 p" ?; F9 p
today.# s1 A) c; u# U- {% D; L
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ } {- }! g- t6 l! z; Femerging markets have no problem with funding. |
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