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发表于 2011-9-17 13:16
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Current situation
" u# j- w9 u9 z% N' ]0 {& s The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 X% n4 w) |; D3 k/ B# _8 n
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 d% {! n6 a4 P
impose liquidation values.
7 z( S0 M" G: W; z% w In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 t/ n1 _; x1 q
August, we said a credit shutdown was unlikely – we continue to hold that view.
& S' I$ Y7 b; G; V The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; [, ?% p C7 ?6 f. J8 U5 S' N
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
" b6 L* D0 [+ M& \. p: _9 E/ Z$ \
: H$ ^( P/ r& B0 S( N, T+ A/ b/ o* YA look at credit markets
$ b5 x) ]6 Q/ r) e2 J% @9 o0 \ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
m1 j) G( u# F% O0 ^. Y7 ESeptember. Non-financial investment grade is the new safe haven.
6 y5 H% v* j+ O3 N2 ~* k1 y, ] High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
% r* H' l0 Y" t6 b% j) @+ R1 @: t, Rthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 _( I7 C' U, M& Nbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have/ h. [, Q7 B9 J9 J" p1 ~* \8 Y
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
! ^* d! A; A0 ^# FCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 t* z* {) R7 _/ V3 x9 y
positive for the year-do-date, including high yield.
( M5 e8 q& u+ ?/ i7 i0 ? Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
- c0 r& V& ?. ffinding financing.
9 ?0 y0 i* @8 s7 m. R$ {% R Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
, v) j- p% Z0 l1 _5 E8 l: qwere subsequently repriced and placed. In the fall, there will be more deals.6 D f4 \( n6 f5 Z7 y
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& \6 ~/ \+ ~; @2 o( D7 w; i `
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were9 x# u2 a/ I- S- w; i
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
7 `% A+ b3 ~/ Q0 L5 p: r1 hbankruptcy, they already have debt financing in place.
/ i; |, c0 j- O( ^$ h, k* n European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ R( h1 Q/ M2 J8 h% h4 S2 A
today.
/ j% M0 Q0 Z/ `: z( z- l3 U Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
. p5 k- z" ?/ J1 J* M3 b" v% wemerging markets have no problem with funding. |
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