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发表于 2011-9-17 13:16
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Current situation
' A: I# C1 n8 |9 n" ?% C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long. W& C& X6 a# X
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
+ f0 K; o* k% s1 ~4 r0 e: }- vimpose liquidation values.
( f5 x; D2 j J% y( t" } In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
$ P) M, o8 b8 q5 b) wAugust, we said a credit shutdown was unlikely – we continue to hold that view.6 H9 d7 V; Y8 u5 h
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
[- Q, g2 Z* T- dscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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2 Y: @1 F! E& w. ^: |, h! y; NA look at credit markets) t* e( L( o% _+ K: {8 Y/ g
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- m4 z. c7 B% X, A w1 b5 M% P$ gSeptember. Non-financial investment grade is the new safe haven.' T" n4 t% R+ l. t. v1 C
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
6 t( b6 v; {4 l; }+ {. vthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 b4 O4 Y( v0 N: ~+ Ubillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
$ m5 s/ Q3 z& y* {1 u; e4 xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade5 @9 i) c7 p' N* I9 j3 g
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are% S! n" q2 ^4 n) b5 Y, @
positive for the year-do-date, including high yield.- P/ L% C; P' l
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ |# W+ F$ @3 i# ~$ t4 `
finding financing.
, w. u) m( [/ j) A" \: ^ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 u0 n0 w% V0 O' k9 w2 g
were subsequently repriced and placed. In the fall, there will be more deals.
1 S5 @1 ~/ i0 O Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! c' v# y! F0 B/ ?
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% T6 S( H( p! v9 d% o- fgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for( N y. V6 v9 ]
bankruptcy, they already have debt financing in place.& L2 E2 _' {+ {/ M" P3 {
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain" [7 C- z( F$ J3 j- `& S9 w
today.2 I' w* j. P4 }7 P5 T: `
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
) n. w: h; {) m! g: femerging markets have no problem with funding. |
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