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发表于 2011-9-17 13:16
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Current situation
6 z( o8 P: c7 Z0 {- O* P The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ e9 T2 I: H3 x8 [; o% V1 O# T% oas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may! [' S' a/ m9 l, k K2 M3 p
impose liquidation values.$ O3 G# V/ o6 F) O+ N1 a
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In9 W! }5 `& C5 P. P3 X" ]9 O
August, we said a credit shutdown was unlikely – we continue to hold that view.1 p& B6 X2 W: [$ o/ t/ a
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
0 {2 _/ K5 @6 p$ vscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.; [( H# [$ U+ E! R9 u3 {" a
7 v" N( A! q3 T& e/ EA look at credit markets+ D$ L5 L6 O2 G3 w& C# Y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
0 W' R/ e( i" i; Y0 \* t2 dSeptember. Non-financial investment grade is the new safe haven.
! ^% p9 p5 k2 z High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
/ [. M8 _0 N# pthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
. R w* J7 K/ C2 ~billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have. b9 Q+ M9 P/ } m
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
1 D5 X9 }- A% W" R0 vCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; X x6 i8 j- [" J2 Wpositive for the year-do-date, including high yield.
* f; U' y, W# `. I) p Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ L5 s# H' V: |
finding financing.
: ^6 d3 }/ v3 M; K! S0 a8 k6 D Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
6 b+ o/ M3 P X& swere subsequently repriced and placed. In the fall, there will be more deals.7 w. N' T# J& y2 p% N
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
- u3 g# e/ ~# `% F! m. @+ A5 kis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were/ ?( j9 K, P( w6 x
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for; k) U. N! `3 m( B& E" _4 o
bankruptcy, they already have debt financing in place.
; M' l7 K8 p0 ?" ^+ B European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
3 {& F, |) i/ g8 L! h6 Ctoday.
: f. E* Y/ `, ]0 x7 m" P; H Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& l: u% f: l, z$ r! J1 E7 vemerging markets have no problem with funding. |
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