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发表于 2011-9-17 13:16
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Current situation
& H7 r* E! e8 l- U( u The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
( ~% K' d9 {- q" S0 D4 m7 Eas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
8 Q( P" B3 X2 i: `+ k) @impose liquidation values.
( s+ X0 u/ M) g* M/ \1 L In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In% P' [5 A _1 t* C- `0 S) g
August, we said a credit shutdown was unlikely – we continue to hold that view. k0 J* f6 ^3 F2 y, q
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
1 d: i# n# o! j5 Xscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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) r ?" m5 Q ^) sA look at credit markets1 x. p# V+ l6 u' f, @ }; y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 X4 K m9 T) w3 T k2 @8 {$ L" [September. Non-financial investment grade is the new safe haven.
4 z8 t" D3 u7 p+ N. l1 Q1 A4 T High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
; `+ k, F x) A+ W% J* uthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1, p3 D6 J5 `1 t6 t' j: n1 u
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
0 h7 N" n( c& laccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade, w1 P1 i" J( D" ~' B
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" J% `# W" t) t3 A8 x# |4 spositive for the year-do-date, including high yield.
' \) H L5 \3 i& L: G: G Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
4 T$ S4 p# ^( Ifinding financing.8 u% ?/ ^5 O6 T: [" p5 _
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
: h) Q) h1 J6 ?% Qwere subsequently repriced and placed. In the fall, there will be more deals.
' f( v6 o. [3 d Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and3 ?* y, n2 ?4 ]0 X* n( X
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
+ T) h4 V2 F c1 y1 x. lgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
3 U9 d! }) {2 }4 ~, Sbankruptcy, they already have debt financing in place.8 i- K1 E; ?+ {. C6 G
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain( W) N) E1 A- ?9 J7 Y2 e
today.
, M1 o7 G8 R0 Y5 s9 [ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 r) G8 E; j% H4 g+ Uemerging markets have no problem with funding. |
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