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发表于 2011-9-17 13:16
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Current situation
2 {5 _2 F# m9 G6 r# D# G0 z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long0 z6 _! ?" P1 f5 N7 V& Q5 ?( H
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
+ B7 W" R4 Q1 y$ B. c# T: |impose liquidation values.4 _/ N6 P* l' G9 f) |
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In) r' t& T D4 d L
August, we said a credit shutdown was unlikely – we continue to hold that view.* d0 E8 i3 a; L' x2 _
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
+ o6 T# [( h, Q. A/ Dscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.8 l- T/ w/ m7 x2 B
7 }* q" Y3 ^& E' X8 |A look at credit markets1 h0 A+ D$ E! B" n; v
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in: {& C6 `" s4 e2 j; D
September. Non-financial investment grade is the new safe haven.) O3 Q X; W6 c M* B5 Q. n# q
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
( @6 R7 o# t9 k' L: l$ Xthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: P' x8 [% q5 L+ l- l
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have1 V& b" T5 c8 J, d
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade7 a( _# m2 E. _" K6 l
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 J, E- j# T9 m3 \7 vpositive for the year-do-date, including high yield.& R$ Q; v- m4 P: m/ s' B- ]
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble" i \9 a+ J5 S) j, w* M
finding financing.) _$ j! |+ S* F2 H% l! e
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- B# l4 Q; s1 }
were subsequently repriced and placed. In the fall, there will be more deals.
. o. N3 T- {; Y3 u, _! U Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ w2 p: ]+ [) m% c1 @3 P0 n
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were V6 {& b( {3 }4 Q; d
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for1 L& K) z! b7 d' T8 `
bankruptcy, they already have debt financing in place.
- i; M9 C) B9 {! T: G/ ` European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
) S' _5 ?9 C$ o; A' L) Q1 Ltoday.
( @9 A' ^. f# K1 c3 _' y7 W3 S Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" [& o6 x3 X) M
emerging markets have no problem with funding. |
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