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发表于 2011-9-17 13:16
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Current situation
, c" j/ @' F6 L3 C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
' Z) v6 Q! T2 {" M' ^as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
% ?& e! P' x6 t9 t- Jimpose liquidation values.+ _- ~. N( a" G$ L, G, p
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
$ Q5 f( I) V( `3 ?August, we said a credit shutdown was unlikely – we continue to hold that view.
/ C, O- D% [. V/ O/ | The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
7 F% p# S/ b1 m( X2 b/ b) F# zscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.7 @; t6 ]' h% c! Q' i ^ G4 X
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A look at credit markets
- C! i' d% [* |8 A9 m7 B7 ? Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- r3 D3 X8 H; ~8 |) P) K
September. Non-financial investment grade is the new safe haven.+ R6 v+ p5 ]$ B1 `
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%0 X+ D* q' Q+ a$ j/ U2 h
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $16 K" W: n: N6 k$ n9 z2 s
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, B+ D" z$ M5 j Saccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
1 ^! _7 J+ V! X3 A: \CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* h3 H; C' p+ O3 A+ r6 i; {1 l. S
positive for the year-do-date, including high yield.& I7 }: ~ P9 m3 E& l5 i
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ ^2 }* F* ^/ W$ K4 `0 @1 Nfinding financing.
8 F- `: C& }; ]+ ~- W Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
0 T; \% r# F- u2 t- B9 G( ^# kwere subsequently repriced and placed. In the fall, there will be more deals.
& r' ?4 I& O7 c Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and. X+ s: n! u2 R( Q2 S) ?
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
( L5 n- \4 O, b ^5 A1 egoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 R! k: k i8 d; C! H% X
bankruptcy, they already have debt financing in place.
0 W$ m) J# X' X: [. Z+ U European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% `6 O: @$ Q0 z" I) X7 M% y( F
today.
, U- ^$ o; k. f4 d! g Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& {5 Y% [4 U2 Q5 R$ R$ B8 hemerging markets have no problem with funding. |
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