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发表于 2011-9-17 13:16
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Current situation
2 n- w/ R% `4 U; N The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long5 N, x' D% n9 W: `6 }& `) K8 ?
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
0 z* Z0 a. }/ C8 R8 Q2 ]( `impose liquidation values.2 `# e" s6 Y) R9 j, D0 z4 L
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 _6 G. H: j* d0 G8 ^7 R0 ~August, we said a credit shutdown was unlikely – we continue to hold that view./ M+ C& O, E' ?# b
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 D* c: ?5 D) A/ Zscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.# j8 l: }$ j) J% l8 t1 U( T2 `
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A look at credit markets
' t! V* C4 g) j8 F! Q Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in$ Y0 M l3 O+ o" M
September. Non-financial investment grade is the new safe haven.
# L m3 N3 r, ]$ q; e: F% f! a High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%/ b- u5 P3 W- M: i3 N& c
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
' d! a5 ~2 X9 o4 Z5 Zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 w7 g; {- y" _/ B" ~# oaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) _% h( d( Y0 ~ F) J- N" p4 w6 b
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
6 ?8 m6 y; a0 \% }/ Ppositive for the year-do-date, including high yield.( ^- \: i% R' ~" {
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
" y* A5 |! S P8 U2 ^( {+ Ffinding financing.3 V5 W* [$ G( {4 n
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
^( `" J; i& L- ^- i: k ewere subsequently repriced and placed. In the fall, there will be more deals.
# e, ]/ @( Z$ g$ h9 C% z Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and7 G# K6 {- p% }7 i$ z' L" K
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were5 V& P# Z, h" j+ j o1 V
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
* Q% ~: v# ^5 j* bbankruptcy, they already have debt financing in place." _# w/ m H8 \
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
2 S/ X/ ^9 ~) @& ]' ~6 ?8 {today.1 ^" T: S3 D4 V9 ]" O2 D
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
* P3 f) p4 |0 @9 H& I& zemerging markets have no problem with funding. |
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