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发表于 2011-9-17 13:16
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Current situation
- h1 p# c0 r2 o, J# G9 G The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
; y1 l! L5 T& i/ ^" h/ gas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 }8 i* i- a+ E6 ]$ r$ Pimpose liquidation values.+ ?; M- f% G$ ?
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In& d! \6 i( [: I8 F
August, we said a credit shutdown was unlikely – we continue to hold that view.
. ~. C+ w# H; d( | The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
" O8 I! \. t }' {scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
# {# v# J7 s; \2 G7 W# n4 k; v( D, u+ R/ k
A look at credit markets
( b+ {6 K- D% U2 A8 v1 W# x Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in/ \$ v" c) t, h* f
September. Non-financial investment grade is the new safe haven.% H8 c9 d& ]( \* N
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%8 G' i9 ~8 @6 z; i, p1 V
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $16 k: ]/ h' c# J% a: e& a
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, {3 N/ j N8 I# B, }' Maccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 ~* p' D4 Z- n- YCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
* b& r, [0 h3 P9 `8 n' j2 Epositive for the year-do-date, including high yield.
' ?4 g4 P5 [+ H, O# n7 q/ @ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble5 e7 u7 y9 K+ U* O. h
finding financing.. o6 |2 @; s* W' J* R2 j
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they# K+ @8 `; X6 G; y4 X
were subsequently repriced and placed. In the fall, there will be more deals.
9 o& O: \/ d& W# P1 T Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
4 {: M }5 j9 c+ @9 Q6 Bis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' _) R# k0 e5 r& {( g
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
; r. O0 v h/ ^; H+ cbankruptcy, they already have debt financing in place.
; i) e' b* X3 X# l/ P2 s( _3 H European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain# _7 O4 a! z( l7 |) b! P
today.
) }7 e" u- k/ M" Y; g Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
) ?9 M' M" N. pemerging markets have no problem with funding. |
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