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发表于 2011-9-17 13:16
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Current situation! ^! u# ?$ j# H) Y
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
7 y2 U0 `* h1 o3 q' fas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may4 d4 z7 h/ ]6 p9 T5 s+ o
impose liquidation values.
! E! `& {1 q; Y& L* f3 l1 s In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
, ?6 |, B7 _, U* s, z2 n5 ?5 A; JAugust, we said a credit shutdown was unlikely – we continue to hold that view.
" ~0 K+ T( |5 T' ?: K" J6 \ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
" ]+ O7 F E$ c" P3 \, K7 Gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* K. c% R2 Y+ i' V
/ x. A. S6 V7 \3 K/ X5 h
A look at credit markets
" d8 z9 w1 w9 R! T% D- | Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
6 L* G+ K, @% G, g6 y3 VSeptember. Non-financial investment grade is the new safe haven.4 o+ H; X) t X
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
5 ]3 _1 u9 t5 [' g9 D# }then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 q( R e# p4 J" r: Rbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- L4 z& _( Z4 y0 P/ f" Z$ O
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade, X! c5 ]% s4 F( S& X$ j2 J" u
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
6 f+ {9 _) K# V+ xpositive for the year-do-date, including high yield.
" A p. `! [- h1 U' D5 E Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
& f/ X; n3 T" B' F" p1 J$ o; v- Pfinding financing.
$ ~+ Y9 R' e7 ^- C' r, j Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 V* b, D9 E7 ^3 e' q
were subsequently repriced and placed. In the fall, there will be more deals., x! D* q% t% U! H
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ m- @& @5 b* i* a$ G: {& V( M/ t. Z
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
?1 {+ E3 h8 e: O# i* }0 X/ Zgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
d4 _2 R M4 A5 p3 h( G0 nbankruptcy, they already have debt financing in place.
4 P- k2 R/ e& C% B) q7 z3 c. B European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
6 u. @4 T- s% a. Htoday.. }! }) N B) {3 X
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
1 M4 l7 P6 V+ p, m9 femerging markets have no problem with funding. |
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