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发表于 2011-9-17 13:16
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Current situation
+ f$ e" d! D2 {8 X9 m4 l The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& r1 C2 o8 u x" t& _' ^as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may' S1 b* L/ ]; A" ^: K$ D
impose liquidation values.; n7 ]# z& j( T S" @: o" s
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
9 ^" Z0 I! U9 A9 V( JAugust, we said a credit shutdown was unlikely – we continue to hold that view.
+ d; `0 t; c' Q A$ _ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension9 `( w5 Y/ a6 x$ o: U: A# I
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets9 F3 x! w4 U9 ^) X0 b! L
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& t: L$ Y& e% g$ _, U& ^$ GSeptember. Non-financial investment grade is the new safe haven.3 g! M9 r' K: e, r
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%) }; d. Q( y9 r: l6 v C% ]* R
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
. @7 O$ d ? @- R! Vbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' z8 ~ h& J$ [; a3 Iaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade. ]- }7 z0 D1 c
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
6 m, T# V* N! p+ ?4 Rpositive for the year-do-date, including high yield.
- B6 v! m7 l0 l( ~% A; V; z8 b& {0 Z Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# A8 N* J* S- p
finding financing.) \% n( O- i( o: R5 ^
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
4 l9 Q# D, x3 u0 }were subsequently repriced and placed. In the fall, there will be more deals.
! \% K3 D9 `/ W Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and2 t; O7 A" f2 Y- r1 @
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were) A' \3 v. l1 l" h: S
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( Q. p4 S' w9 e6 M8 S ?5 B k5 abankruptcy, they already have debt financing in place.
' K7 B: M- N; W5 _% N& Z% | European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
$ ]2 j% _" y& M1 U: Xtoday.
2 j6 b+ }9 a' t$ g$ z9 U6 W0 ]5 N9 w7 z Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# \- }2 m. p9 s" a# e3 {
emerging markets have no problem with funding. |
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