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发表于 2011-9-17 13:16
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Current situation
' G: _9 M- C( T q% U( {6 v; C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long5 c# c9 ^; H. U6 z9 k: s" E8 r
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may8 F- Z Z6 O# i1 v6 P; n, k- p" n
impose liquidation values.
4 T# [! J. o* K; }/ ` In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# c- A/ E# m! D5 {" C fAugust, we said a credit shutdown was unlikely – we continue to hold that view.
3 I# w& ~' v, x The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 s) U, Y3 C! u! @
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
$ u' Z z4 {8 c, U1 Z2 L/ u# L* b u: b6 l5 a4 ]- h& l% n! @+ w; f
A look at credit markets, x/ v; O( M2 C9 ^1 e
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in) g" A. C' d3 s* X
September. Non-financial investment grade is the new safe haven.
0 e4 l( N' M4 j4 e0 [, c High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%4 Z, K& o% Y8 n- L1 ?2 S6 A- g
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
1 q$ _& J4 ]- k; x- s1 obillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
; o, d6 P- A- N8 h. ?* X! h4 Y2 Uaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) n+ Q: X# t7 t6 O+ C. |' [8 }& p
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
& [) Y; @3 L1 e6 k2 y. Mpositive for the year-do-date, including high yield.- O2 z/ V. F0 Z! D1 R
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble: S( D& A% |8 {& d. `
finding financing.
2 h- Y4 l1 v, a Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they; Q9 D: D, p3 R7 v
were subsequently repriced and placed. In the fall, there will be more deals. V e6 \, Y" k$ O& G+ ^. I. C
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, p0 L9 I( D1 Y6 @) dis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
u# c5 ]. A. d- \! t* sgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for o% L- }1 @1 F' G5 D5 j3 g5 I
bankruptcy, they already have debt financing in place.
' L' ]* i4 p% i' ~6 ]6 [ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
) `# y- n/ ^# k& U6 y% ktoday.
2 f5 v/ [( J" c Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ h& K( O# J" o6 J/ I9 A! Bemerging markets have no problem with funding. |
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