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发表于 2011-9-17 13:16
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Current situation5 \% c+ \( V- |
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long# p9 L3 l# i1 i8 q) j9 R4 _# L
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may) P) f7 S2 S: W; P( C" ?
impose liquidation values.
* s2 V; X* h1 \2 P In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 i: G- N/ t" U9 |9 W: vAugust, we said a credit shutdown was unlikely – we continue to hold that view.! R6 f6 b& v/ x+ \/ d
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
# B! D* _+ ^# B* {; Q. Q& j( \* mscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.0 R) f4 e$ x- @: _8 o! o8 c5 i! y
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A look at credit markets
- p3 ?: [6 V' M; V Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
$ o; z, ]/ B, U: S+ d$ T, l2 ?September. Non-financial investment grade is the new safe haven.8 p( ?) d$ c- R" k, Z5 X- L
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' H. Q7 J1 \. G6 J T" j# |( _' m1 V7 Y
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $11 H; Z k) A2 F1 b
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' R- U9 h/ K: P$ d% g1 q- jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
# i& L- T0 H+ N0 ECCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
, D& t) x" v) q: Bpositive for the year-do-date, including high yield.
% q, B3 D2 r: b& Y1 [ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble% U/ l/ s" n) H" _
finding financing.
- A% V5 N7 N2 P- Y/ l7 A; y Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they# y8 ^* i: q4 {8 o- r2 R+ p
were subsequently repriced and placed. In the fall, there will be more deals.; @0 d4 _7 x( P8 c$ L) v' \; ?9 A
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and7 i" C5 m) t" l* w( J* i7 `
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
/ \2 |) _' q3 C8 n5 I* @2 fgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
0 k9 z- g; v! W. M5 J2 ~9 {bankruptcy, they already have debt financing in place./ T7 s' X% x* L, i" \5 `5 c4 @
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in5 N% h, g0 T, x' K
emerging markets have no problem with funding. |
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