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发表于 2011-9-17 13:16
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Current situation
) ?/ c" g; O6 g' Q5 c) o The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
+ o' z! F5 O' F8 o& Was funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may0 Z9 C+ w' y( \/ ]( g
impose liquidation values.. I+ n2 U0 c A3 p; L" a
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# v% l5 d2 k/ }August, we said a credit shutdown was unlikely – we continue to hold that view.
. o/ K2 o: e7 q8 G0 Y' M* U The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; N4 y) H# }9 H1 M9 X! R; [3 c
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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+ [3 A. n4 _' F! j# hA look at credit markets+ f3 c5 P" s1 }; c6 n/ _" P3 f( f
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
; A& U) j, f! I, i0 H" I- ~September. Non-financial investment grade is the new safe haven.
) d) v7 ^$ V% h n+ [' E" I3 U+ P High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%3 D) ]4 d. m( J7 i- {
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ c5 h% z) w& z9 [, V9 Ybillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* x5 p3 J% _, `% p1 Iaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
, x3 l7 U N0 yCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
( O" N# q' ~) [1 v2 D. Q3 \: x' T3 [positive for the year-do-date, including high yield.
1 }' p/ c( U9 C& T; q/ A% E1 Y Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
, P% x3 a( E$ Tfinding financing.
+ `! p/ R) h7 L, @6 O Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they! l. m1 T! }/ S8 ^! X) i
were subsequently repriced and placed. In the fall, there will be more deals.! }( @0 x! C! }* \, v e! c
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
4 Q( T6 G: L$ k) Q( A- g6 D+ I9 Uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% O/ J7 ]- P8 Q4 n7 O3 Ngoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
: r& g" r6 t1 t2 U* @: o1 z* _bankruptcy, they already have debt financing in place.: E" X% ~& Y0 W, g1 {( h# t
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% @! U0 B1 g$ d2 ^7 i5 o
today.
% ]' @ |4 G2 L( k/ a" s Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- u V- q5 [. X9 D1 u
emerging markets have no problem with funding. |
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