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发表于 2011-9-17 13:16
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Current situation
, X. W: s) J0 K: ~4 Y5 i The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
% J( z9 \$ v. C. \/ gas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
) ^7 X1 @& G, Z7 Eimpose liquidation values.
6 W3 Y' B; e3 Y) G9 C) F0 b In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In/ F2 n e9 p. ]; R% @2 f0 R, m
August, we said a credit shutdown was unlikely – we continue to hold that view.
& P* c c' w$ q5 @ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 H0 E2 {+ A! I) P+ D7 V$ q. x6 p
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
3 @. Q' ^/ C4 e7 g' \5 O" q( s Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
* W- R$ i( C t5 C, T' iSeptember. Non-financial investment grade is the new safe haven. G' ?4 G, C+ L
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
$ |& C+ J* L" d7 c8 nthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1! H$ M! z' m& X! W8 A3 S& ]' s
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have' Z* S7 Z8 [( |) ?
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
5 f% i6 [1 }% E$ E. T# s& z9 pCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: C* z' h/ y* y! k
positive for the year-do-date, including high yield.
6 i1 B6 m# Q4 M# n% a. L" F X3 | Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
6 W1 I: X$ ?$ k# efinding financing.( e c; t# c7 P! j: W
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they: D6 t* K: J, Z3 P# T2 E* V' q% b
were subsequently repriced and placed. In the fall, there will be more deals.+ ~! N: ?. G3 T, g
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and I% \9 B& b/ D- u6 r
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were1 O7 |$ T5 H# v0 I% |7 S
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
* W( t% c! }$ W5 s8 N* C& abankruptcy, they already have debt financing in place.
7 ]& O7 i# H8 U0 o& _; |# f) Y0 J European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain" Y8 o7 `4 f" f0 v8 q
today.
9 M8 b! z" x3 R. H. R" C0 M Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& e6 T' }/ k3 aemerging markets have no problem with funding. |
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