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发表于 2011-9-17 13:16
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Current situation- C" u0 W3 ]. c* y
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
$ A9 T/ y7 N2 M# {7 r' cas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may- M# `" f/ ^1 L1 W3 y
impose liquidation values.$ B3 m, k! v! f
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
9 y: I9 D! i9 b' T4 K E6 U. wAugust, we said a credit shutdown was unlikely – we continue to hold that view. A0 Z, T; A# @: t( d2 h/ I
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension& S: o# E( A/ F0 R* r5 G5 w4 B
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* b0 O7 i" {. r
5 o9 e7 K1 n, y& [. R% j4 e/ U3 eA look at credit markets
# J$ k {' ?3 N- f3 T Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
$ y- N. d9 Z l- H8 V- e% ISeptember. Non-financial investment grade is the new safe haven.6 z; ]) U9 C# b& J
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%4 o: U0 M+ v- j: f
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 Y/ X* n: A; E5 g, F7 i5 gbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
1 y* t9 `5 ?- }( F: K6 r; |& k: {access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# l/ R9 J6 G6 |- D$ e% y
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are9 O: r0 j0 [. V" C# n1 |
positive for the year-do-date, including high yield.
8 i8 X0 ?8 g# ^: F Mortgages – There is no funding for new construction, but existing quality properties are having no trouble! z+ [( o8 A6 S% l$ k( n
finding financing.5 M8 i7 R: {' F
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they) k5 C6 S& h5 g7 ~# U. E
were subsequently repriced and placed. In the fall, there will be more deals.8 J1 _. ]5 f( N
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
% C9 X" X; p9 L+ t3 e- N2 wis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were! U) `" Z8 [$ ]/ b' x. ]8 g: z
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
; u2 V' p& ^% N" s9 Cbankruptcy, they already have debt financing in place.
3 i" t! S" T9 G5 v European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
* C5 k4 b, r& Q6 N, R) A' Vtoday.
! J0 e/ _ M& ` Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
* \' q q' [% W- |. i& cemerging markets have no problem with funding. |
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