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发表于 2011-9-17 13:16
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Current situation
9 L$ k" L3 G4 Z5 t/ W The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
' _- p' H6 T @( r" X0 ras funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may) [$ A5 O9 K8 _2 [, ] w/ k5 `
impose liquidation values.; T' g. ]! s+ {. |" i2 [- L+ K
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 H' Y0 e2 n' T. V' e5 P6 D/ X
August, we said a credit shutdown was unlikely – we continue to hold that view.. ^2 B' ?7 M" [" y/ o4 H
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. H/ f$ a, B1 o& s2 } x
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.% d+ K) x, }! K
) [1 _% p3 N3 D' N3 B- Z EA look at credit markets
. j: [' V% j, y) s/ H Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 X' [5 Q! K/ y( ]6 B* V: ]) e
September. Non-financial investment grade is the new safe haven.$ P8 D7 H7 C) [* R' Z( ^
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
0 T( W) K$ O# }' Cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; M, a; O. Y. gbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have) H* Y9 M' X) R& H# W, y7 d& ~
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
! |! {' ]. e) S6 R1 N) ~CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
/ ?$ G b/ ]$ E. ypositive for the year-do-date, including high yield.
4 ^. ?& u4 ?/ U+ F5 v Mortgages – There is no funding for new construction, but existing quality properties are having no trouble2 o" H2 u4 L2 W! W
finding financing.3 |) b/ s* J j
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they. w3 L! g( w8 n$ T
were subsequently repriced and placed. In the fall, there will be more deals." P0 m: i( X% `$ q1 v/ g
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and5 m# H0 Z9 K% D! W
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were* q: D2 a) {3 F X
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 d2 w9 y/ x7 I- R$ f3 p3 \, k5 _. D
bankruptcy, they already have debt financing in place.
7 w1 v' j/ c0 f3 t European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain! v- D: h7 h& Q
today.
! L# Q2 {5 g: Z* ~" P Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in6 l" k' [; |2 O5 ]! ]& h
emerging markets have no problem with funding. |
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