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发表于 2011-9-17 13:16
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Current situation6 n2 W, _; G. O, H4 h% T
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 D- i% `( S5 k) kas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
' O- x, ~* E3 I V3 Uimpose liquidation values.
3 P& n5 m0 I: N. s s7 ` In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
! X4 F- ]% u8 p7 a7 B' {August, we said a credit shutdown was unlikely – we continue to hold that view.) @4 h2 u2 A2 x, t v0 e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
0 N: P' Y6 h/ r3 T+ Y1 B& L1 Cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( E" V# G, w. t
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A look at credit markets
, I: D; v1 m. y& w. j9 i, H' I Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in* G8 Z+ S. w% `) q, [
September. Non-financial investment grade is the new safe haven.5 n7 O9 `6 E9 q5 ~
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%" C; n* p) D. a, ?! s1 n! h, G0 }
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 I) Y; e* Z; Q1 d( O) Q( z- dbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( y4 X3 b# [3 [- \( K1 R
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
E9 M$ \5 U0 [% a) YCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are& m" U6 [! [+ W/ N. [+ y
positive for the year-do-date, including high yield.
- _3 w% _: C+ L* J1 {7 O4 H: l Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
" A; N q& c# o7 o; ?finding financing.
q y6 T: S' M4 \) F; @5 a Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they' R6 [7 e/ J( f: p! k% x y) S0 r
were subsequently repriced and placed. In the fall, there will be more deals.
7 j! X$ t9 r c9 v6 v [/ j Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
! I, {- M9 d9 pis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were4 b7 U3 Z" o R7 ]( E4 R1 e
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
4 V! x2 c8 f6 Y0 k+ gbankruptcy, they already have debt financing in place.9 H! \; G: j4 X9 p8 _
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain" r1 Y4 a% l- j* V& K2 w y
today.
1 R+ u& ]; {; [7 x* ^ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
8 f8 z2 [9 l5 x- B1 e1 K8 Lemerging markets have no problem with funding. |
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