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发表于 2011-9-17 13:16
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Current situation# ]. y: ~8 m7 e3 S& h
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long# Y" l. w7 d) e
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may+ W. `+ P' n$ j3 L
impose liquidation values.! p, G8 z+ [3 T/ ~1 `: B Y
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 |1 u! D4 C0 d0 d. b, t
August, we said a credit shutdown was unlikely – we continue to hold that view.
' U+ h# L! `/ K+ \6 P$ b2 B$ b The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 D2 Y: o( _; a8 ^) C& Xscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.6 f9 k% j. s; Y
& Z- v) M2 J7 X f8 {4 s
A look at credit markets
8 h3 W, s- b& O& ]' K7 o Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
1 W( C2 k* S1 Y+ a7 L8 ]September. Non-financial investment grade is the new safe haven.
& t$ h( p/ l1 a5 O. Z- z/ H3 ~( ` High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
, S# d; L' O7 c- D- _- I1 ^2 nthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1& }, r# m; v; ~
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
3 d) e$ t$ q* d* W" ?# vaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
. [, [' h. {3 hCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; e! H* J' B' G, b) i& Cpositive for the year-do-date, including high yield.
( U# n9 Z+ x* }4 V; O3 O2 I Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
6 i1 R. x5 `5 A. [finding financing.5 g, U% `: U( H, _
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they/ X. d# v) C. H4 f/ J3 n; }/ V8 _8 Q6 m
were subsequently repriced and placed. In the fall, there will be more deals.
$ `6 J* H e" {' q. T Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and7 j$ ]; Q$ v- G/ q$ r, c
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
2 Q" } p6 N. X, `going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
0 v6 v- w, B3 l* I4 C$ V) e' Bbankruptcy, they already have debt financing in place.
1 _" V; O% y* t2 q' R4 l European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
& B+ L f- _0 L7 r/ U8 qtoday.
+ m7 n/ w& `' C* D& |5 N Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 ~! k8 I5 \! k. |emerging markets have no problem with funding. |
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