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发表于 2011-9-17 13:16
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Current situation0 A5 a+ ]/ D5 e! _ o. k, E2 S" B
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
) H4 h2 V% H- P1 D# ~% F' |1 Pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# ]) ?5 ~6 J# l2 jimpose liquidation values.3 G' \6 e9 E" @$ R
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ C& g! |) F1 Y# E+ eAugust, we said a credit shutdown was unlikely – we continue to hold that view.
$ {. \& b9 [1 j% G& f4 u3 h. [5 k The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension/ H+ O. M5 A+ m- `$ I! q0 v
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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5 @9 \- C4 O3 JA look at credit markets7 p; M/ `% r* g
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in7 R7 J. x q+ o- s1 P
September. Non-financial investment grade is the new safe haven.0 [3 [) T+ Z/ F3 K7 }3 Z/ e3 i2 D3 E
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
0 ]4 ?9 @/ v, S8 T$ y' c" l' C) dthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1- K9 D/ K5 {. `* _
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
# \7 |+ S6 r0 D, d. iaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade1 y" l2 _: V, W$ q R h8 N% ?
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. k0 Y E8 P9 P
positive for the year-do-date, including high yield.3 F5 @% ~, o# t9 J1 H- q
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
2 [( _! A5 B- V3 F: ^# P( K8 J1 zfinding financing.
, {+ s( A; K9 v Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they' n% r5 q0 X- f
were subsequently repriced and placed. In the fall, there will be more deals.
" C' z) x4 E _% t, S Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
1 |: K3 V' d) O' @! eis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
2 B, i/ [" H# m* W: |2 @9 Y! D, ]# \going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
5 ?3 j( y' V! V* ]0 hbankruptcy, they already have debt financing in place.
- A/ Z" z \1 s3 q. O European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain: M9 N. n& S8 C1 s& ^
today.
& m% E: r, J/ `/ o) T, K% y Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
4 K3 l3 Z) C2 t) p( e! Vemerging markets have no problem with funding. |
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