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发表于 2011-9-17 13:16
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Current situation
0 R6 o4 }. V1 T8 R The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- J4 L" S) A) _) f
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may+ W! f3 D# P! r! F0 s- a$ j0 B- ]
impose liquidation values.
( g+ s8 Z; o0 C6 S In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
3 @- m* l" z* X1 Y0 t1 J6 B/ OAugust, we said a credit shutdown was unlikely – we continue to hold that view.. i, c1 |6 E+ D. B: p
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension2 P/ K$ k; m4 M$ T8 \4 c1 j; {
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
$ e8 k4 ~. j# b' {5 @ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in$ M. L6 S7 }4 F# y7 N* T
September. Non-financial investment grade is the new safe haven.
& M3 y6 f5 ^5 C' O1 i+ j High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 z- }1 \- e2 i( S. T
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1; o% i+ U9 K3 Z9 Q6 C
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
; g1 M5 E6 |, `: Y7 O4 ` caccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade- Q) _" u2 L3 z& }! N. l
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- ^% b& D! o o) c# a5 D6 ? Qpositive for the year-do-date, including high yield.$ m/ [- y2 ?" ^" N8 z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble8 Q/ t( J2 r3 P7 Q) F
finding financing.5 a" a: ]& Q5 x( g. M
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they+ r6 w' y1 ~/ E
were subsequently repriced and placed. In the fall, there will be more deals., G3 f2 p! N/ i9 O" b
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 e8 {' m5 N* z& ]& C. t+ i
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
# x# c* P5 R: @& T4 ]; Ogoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
: @! h$ R5 H' U0 Q- vbankruptcy, they already have debt financing in place.
5 }- @3 b4 x* s- Y) F1 ^ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain5 U) D7 W* `; m( V
today.
: C( Q5 a" t, p Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in' S x+ C& U7 D. j$ ?0 J& [
emerging markets have no problem with funding. |
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