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发表于 2011-9-17 13:16
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Current situation
/ k. a# M4 b; ]6 J( h The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ ^) R8 Y5 Q9 ?7 A+ Kas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
: P4 D* {! }+ U4 {; iimpose liquidation values.
. F6 s7 H3 z* q, I& S In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In9 y0 c6 l6 a, p: z# U6 Y+ M
August, we said a credit shutdown was unlikely – we continue to hold that view.$ D' F# ?& K2 h3 u9 b+ m7 S
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
! D! Y) m: x% `, M/ W8 Z& escrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
# }- K' }" `6 A+ a, Z2 S. x# ]5 }% \4 R }. w
A look at credit markets- J( a; U4 ?' [$ B; i
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, ^4 U# [1 i" m! ISeptember. Non-financial investment grade is the new safe haven.
; l6 m$ {$ T/ N7 V6 d& i High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
; C) i. ~- T4 O" @, j: K& K) n' rthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $14 V: h6 `6 }& g+ A) G
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have% Q2 Y2 \/ c/ \* h0 x
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 S( G' X2 f8 k2 z' }2 G/ v
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" i* J1 z1 B3 n' |% t X' X6 Wpositive for the year-do-date, including high yield.3 q# {! X1 r8 R5 U5 |3 w5 H
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble4 e l, W4 y8 L
finding financing.! M) i! e0 X8 k
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
7 U( q, Z5 `4 ~3 ?) [/ _were subsequently repriced and placed. In the fall, there will be more deals.
+ r5 V1 ?" ? A' u' u Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and: r. Z* b G. H
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
; g4 k9 M/ R6 T& [0 f' Ugoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ _& d( x5 Q' L, hbankruptcy, they already have debt financing in place.
% _8 M8 Z; }; Q European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain: h, g" ] [ o+ T5 t) g; [" i
today.
( s1 m9 Z* Q r8 L. b+ _! ~ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 S, z% ^- C" ?& W2 |& h" }emerging markets have no problem with funding. |
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