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发表于 2011-9-17 13:16
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Current situation
: B r4 g0 ]* |1 `. _# H The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
# J) \5 u7 x; m& I" pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may+ B3 v9 B. v- D, t- I3 b4 e2 Z
impose liquidation values.
- \4 t# H8 M0 {0 a3 t$ G1 h In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
9 h; y* K2 G, Y% k QAugust, we said a credit shutdown was unlikely – we continue to hold that view.- i, e. m- D0 E
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
, f* @6 n& ?+ Fscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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7 c8 ]/ u+ L% U3 IA look at credit markets& }* P3 j( i; Q$ m
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
7 s X4 \8 X8 O A4 d' M& W% TSeptember. Non-financial investment grade is the new safe haven.
) Y) V' ~# [: W3 I9 N$ Q High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
# h* Y. v+ Z/ W7 w* B4 l- b$ \* _then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1, X1 r2 N9 @9 n4 J3 B2 a# Z
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
1 P0 ^( A+ S# W2 s+ maccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade7 l% Q! ` z6 O2 x' @
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are0 b3 [( d w7 H6 n+ ?4 b5 H Y
positive for the year-do-date, including high yield.
! t! h# z Z- @& s Mortgages – There is no funding for new construction, but existing quality properties are having no trouble/ I! l, [, B9 T' t
finding financing.6 y* |: U; h; U5 \" [/ R! ~/ f/ V0 L
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they5 B N, L, W* l0 {- ~% x, j5 z
were subsequently repriced and placed. In the fall, there will be more deals.
6 z. O+ N: b& P/ O; m Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
! X* m" A$ _ N0 V3 a5 ois now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
& g" n# _) h! z# ]( L) a% qgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
9 Y8 H( `5 o; k4 _# O% Fbankruptcy, they already have debt financing in place.
5 a4 B: A2 S& Z& w; L( d/ ] European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
) l1 G& W+ |( A) h2 xtoday.
6 B7 b0 [ P3 p2 d7 A+ v* t Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in) ~5 o) R! @5 |7 M3 B, j: z
emerging markets have no problem with funding. |
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