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发表于 2011-9-17 13:16
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Current situation
7 ^; Q. ]1 F# z3 L1 M% H& V The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, S, {' g( ~: v: F! q* X
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may: Q/ z# P4 w, _! n
impose liquidation values.
0 u6 y _2 |" T; ? W/ _- E In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
: j* d) a. G" ^9 S7 T( JAugust, we said a credit shutdown was unlikely – we continue to hold that view.: G9 |/ ?* n7 Z! f3 U0 H
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 q, P- b3 Q7 ], v6 c0 I
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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% e% U5 S' ^6 ~( HA look at credit markets
/ x* Z+ |5 n( ]1 p Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% X0 G" f0 G! b% \2 w, `0 Z
September. Non-financial investment grade is the new safe haven.9 t& `( Z7 |' }) D z
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%; x8 A$ t9 P5 {8 g6 u4 u- V# o
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
) A: k5 u9 m! b+ A: E/ s2 V! Vbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 m' C: W) [5 o0 R8 l+ D! y, Daccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
: k' b* _& V) ]5 ]CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 a3 D% a# |5 _" U* q- p1 N% o# Cpositive for the year-do-date, including high yield. T" g( z7 ?# V
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ w5 I: H9 Q* m* }6 Zfinding financing.& K/ k; f$ A2 q1 B6 H0 k
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they5 f7 I/ R) y. t
were subsequently repriced and placed. In the fall, there will be more deals.6 H G$ K9 C* S2 U. j, ]8 |/ k
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
$ y6 ?# Z6 {& o4 @7 S. His now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were" ?8 u4 B0 r% a! O- D, Y" ?
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
6 r$ P& i' \3 m) Fbankruptcy, they already have debt financing in place.1 p0 P) }/ J) n
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain H, Q& ?8 `& y% o
today. X/ s) ~3 D4 x- Y
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in! H& t9 U0 F1 ?( L2 g$ \6 P x0 l
emerging markets have no problem with funding. |
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