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发表于 2011-9-17 13:16
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Current situation5 t: ` O) o6 g( w% y D
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& [+ }: g* `7 z7 a& I8 g
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# m7 V$ X& w% R) o2 g4 p6 R( iimpose liquidation values./ m0 }+ n$ k% |; U
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In. H# ]# A) \- d5 h W6 I5 x
August, we said a credit shutdown was unlikely – we continue to hold that view.. O K4 O/ v) W( P
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. L' O* K9 d! s0 G2 ~# o& a1 {
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets. \# u9 J0 a2 g3 V! ]! u' c' q
w5 D9 ?8 u* ?7 i* W; N/ w' i, a: ?A look at credit markets
% c! d4 m& @( n$ a Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 R& I7 Y" C( Q! Z+ Q CSeptember. Non-financial investment grade is the new safe haven.
# v0 i4 K, @; q& v; @5 o$ q High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
' B Y& z; s0 I/ T5 ^2 Cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $14 V: z7 Q {2 ]5 @8 L0 ]
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 o/ h, _( t& N8 c% r- v' E
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! k% s6 C% c8 A; \5 F3 d0 Q+ R
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are& Q& Q" w- O" W. H4 E
positive for the year-do-date, including high yield.
' r. R$ j. L- _* B Mortgages – There is no funding for new construction, but existing quality properties are having no trouble7 M5 T6 Q9 [9 S% o; G. }3 P1 f& n
finding financing.4 i- h9 [" Z: S; {* r/ k7 b5 r( ^
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they+ N8 T) `, ?* S4 O5 Y" r
were subsequently repriced and placed. In the fall, there will be more deals.
8 M. V/ w8 N4 I Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and$ Y ^/ Z; ~: J* g& g6 b
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' L+ l7 L) T. p/ J
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 ^, Y" w+ H1 ^3 A
bankruptcy, they already have debt financing in place.
6 r0 p1 \: P# l* a4 m8 @0 L% c/ i European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain5 o1 I. b. f: a9 y& t4 Q$ F" L
today.
: ` p- V" ]2 h" {" H. t Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in7 ?+ C* Q* Y" E7 z+ O' X
emerging markets have no problem with funding. |
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