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发表于 2011-9-17 13:16
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Current situation
. R1 T% k% {8 |" X, W& _' X The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long7 b& h- V+ m E! D+ v
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
/ r6 F7 w* m4 b8 b& vimpose liquidation values.
: H+ u& d3 i; J4 I { In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In5 e% G$ A- h7 |. i/ a w. D9 [: N
August, we said a credit shutdown was unlikely – we continue to hold that view.- O8 C4 z$ P9 |( d0 Q7 e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 |5 A, a+ s- n- V
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.# m: p7 P& _5 \0 N. U9 z q
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A look at credit markets2 P% x/ w3 K8 f
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- t: x' H8 D: C4 k2 |1 BSeptember. Non-financial investment grade is the new safe haven.
0 B/ m- J8 |. P4 s% S* k High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%8 M# V+ }2 G# D# G
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1' c5 y$ t+ ~8 g
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
; C8 s8 B6 u: Y; G: Saccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 g. g: S. i5 j! i: n
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are5 l% n; {# J, I
positive for the year-do-date, including high yield.
$ [! _) {) v4 {- i! P: l Mortgages – There is no funding for new construction, but existing quality properties are having no trouble4 D7 P. l7 a' |4 Y ^, E
finding financing.
9 S3 j* K; f6 U! Q" F+ A- A' ^ L+ d! M Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they) U: g' p$ T0 Z
were subsequently repriced and placed. In the fall, there will be more deals.* ^) P0 U6 `$ B/ n# x, l
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
" i: Y% \6 w+ Yis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ ` l* S. {+ L! \; Wgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 l+ \# z$ D! d: T! ]6 `- q
bankruptcy, they already have debt financing in place.' t8 F9 V2 m5 ~
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain" ~; Z; ^& ?+ ?- c+ }& K
today.
8 `0 M+ f+ E+ o Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ j$ W) a( I6 m8 d0 g demerging markets have no problem with funding. |
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