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发表于 2011-9-17 13:16
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Current situation5 {( T; Z, z5 D* p! I; V
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
* E5 c6 O8 J, M1 c, C0 t' cas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may% [3 V. N& u8 T' F) \$ U
impose liquidation values.6 B/ Z- K( Y; z, F* o
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) j1 n/ J2 V. L5 Q6 w8 Z JAugust, we said a credit shutdown was unlikely – we continue to hold that view.
9 @, }6 q: r$ ^8 t9 m0 A The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
5 l0 M+ M6 f9 Vscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* ~+ e4 I0 X9 ]4 {) l& v% X E# D
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A look at credit markets+ S* u' W% r \& f. e7 j/ T; h
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in2 w. J# l4 m! p/ n% e
September. Non-financial investment grade is the new safe haven.
4 U* Z$ w6 T3 g, D High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
. v% Q7 D6 Y/ j" Sthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1* T$ Y# k/ f+ x9 ^) D b( ^, W
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have i/ G$ r) d ]1 h2 d$ V) L' s. l
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- `! c3 X5 h- Q; q% @" M8 P) h, PCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are4 n6 p9 \* { m/ _; j
positive for the year-do-date, including high yield.
t3 W3 R* _/ H; R, a) P1 F Mortgages – There is no funding for new construction, but existing quality properties are having no trouble2 V: O( W* d m! r
finding financing." \5 L! g3 V* z* K2 u8 \( E# _
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- ?6 _9 o) }2 }4 |, B; s8 E# y
were subsequently repriced and placed. In the fall, there will be more deals.8 U- e5 m# a# V& [ T$ ]0 J1 P+ L' t
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and; I$ K/ `8 w9 X- |
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were2 g. A0 n& g2 u" h4 D( _
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for# D; D0 }: l# b9 H! `, {
bankruptcy, they already have debt financing in place.
- S1 D' U- W ?5 L0 \ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain; P) S) g; Y5 R. C
today.5 S9 [( y r! N- W& z" A; T
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" }/ W" W) R, W3 z( b x
emerging markets have no problem with funding. |
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