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发表于 2011-9-17 13:16
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Current situation
& G# U% j+ v0 v2 M9 C" E+ |4 e/ S The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& O# A- J! |/ ], W
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
2 ?7 T G& C L, l' O2 Yimpose liquidation values.+ B2 U! f3 K* O, r6 [
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
& G0 c G& b3 ]: G# ]August, we said a credit shutdown was unlikely – we continue to hold that view.9 K" S+ Q6 g( [$ d
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
, H: n* B7 W( l6 m; R2 D/ A5 @scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! ~1 c# O# S0 |' r. |' e* ~
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A look at credit markets
& G% K6 _* \2 {% R Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in4 O# d" c/ ~; v* B8 d1 J* `
September. Non-financial investment grade is the new safe haven.
) T: Y4 ]/ g$ B9 G3 T( G; f7 W* G High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%4 G: P6 y; ?" b: A) _" l3 o
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
( J' ~- l1 ~' V% {& F6 Y% ybillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 T# @0 b( Q H& ?3 J+ c3 _5 o3 U. Zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
O" X) z- @3 k* ^4 XCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# `6 N u' p, ^& j/ z" B& \
positive for the year-do-date, including high yield.
+ O4 k+ R( n: W! c Mortgages – There is no funding for new construction, but existing quality properties are having no trouble& [: `$ j1 ]& h; x, C
finding financing.1 N* x, A/ r1 [5 [
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
5 t( }3 i+ ~; L$ Q5 o0 Awere subsequently repriced and placed. In the fall, there will be more deals.0 F7 V% r0 I% ]- _' S1 k
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 |! U- l' X; I# O1 N
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
1 j8 R r% J2 ^going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for. |) D# |5 t2 t3 J9 r' M+ c2 Z/ [0 A
bankruptcy, they already have debt financing in place.! [3 _' m8 u: Z$ H' B
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
d" w" N4 N1 l' Gtoday.' [1 R& n9 ?. K
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' d/ r2 z) k6 u& Yemerging markets have no problem with funding. |
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