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发表于 2011-9-17 13:16
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Current situation
- ^3 b. Q3 E" w The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 U# }, f, N/ \0 [4 J
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may: K7 n( `, |2 F' R
impose liquidation values.
1 V2 x/ l/ u0 l' {) h In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
5 R- s: ~$ U3 x: IAugust, we said a credit shutdown was unlikely – we continue to hold that view.7 Q6 h9 Q; I4 Y* A* E. |4 c/ E
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension o+ u- T' p; u8 R3 q
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets! `9 N( N, U' V; ?8 ]
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in' d1 p5 c+ T% R" E" [
September. Non-financial investment grade is the new safe haven.6 V5 V" Q S0 C* K! `* D
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7% Y/ ?, U4 t8 ]+ S7 M" t$ H
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $10 v- Z& k. [; W; r9 d4 |8 g- N' v
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, V! L, E! m/ N& qaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
f( W" l$ \3 c7 f0 BCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
0 p7 S9 C, l& S( u* tpositive for the year-do-date, including high yield.
5 F) ^% C5 Y; a Mortgages – There is no funding for new construction, but existing quality properties are having no trouble" [ C" E( F4 {& {$ f3 T
finding financing.) y1 F% v% D; k
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
8 ?7 R# [3 g( N3 `: w) rwere subsequently repriced and placed. In the fall, there will be more deals., A2 B1 R, @; K2 b- [
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, f3 a& A& P3 Q1 z/ O2 ~is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) F5 {& }6 W- ]. K2 t" ygoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
+ G- y! @/ d5 q9 }bankruptcy, they already have debt financing in place.
1 _) l) q, |1 J0 ` European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
' Q! R' s. O0 G" J4 D. k |" c, L/ Jtoday.
; @# v0 W. g! F# Z/ ^8 b0 h Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
- J' p. v; R- M4 w* kemerging markets have no problem with funding. |
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