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发表于 2011-9-17 13:16
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Current situation) Z. I. J) ~! u# N
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long0 v2 m9 m- N* p Z, y8 Y5 g
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 ~5 S) ^7 f, l5 e: v( m- qimpose liquidation values.4 o) Y! {, {3 U
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In4 q+ [ {! ~( A0 S4 C5 g8 O
August, we said a credit shutdown was unlikely – we continue to hold that view.
' `9 G# u7 {6 B# d The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
; Y/ M- b" a- Cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.4 V1 C- w% l0 w4 y" T7 U. B
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A look at credit markets! r2 L" |8 Q1 z2 \3 w+ B* o. z
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
$ W; d* `& T' I* T+ ISeptember. Non-financial investment grade is the new safe haven.
* b$ k, [) o' `% M. ]3 p$ A High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
0 {3 [- S1 z1 i! g1 Nthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
/ I; J3 {- E" nbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have: |/ S4 s# }, L1 B
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade: o% a- ]9 Q( l ]$ r9 C+ [
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are( J: r, z& b, c, ^
positive for the year-do-date, including high yield.
6 t x% j, O6 c Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ D& _: Q8 E$ S/ d2 K# m$ p
finding financing.0 [: x, k" I0 A/ U* ?( o
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& l6 L$ ` b' k8 l. R9 O vwere subsequently repriced and placed. In the fall, there will be more deals.
% _. B/ n7 d6 d" s" y( s3 ?8 o Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& t) v$ ?9 x! g; O; h5 T/ M, o$ T
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' A6 i- d6 C( r, k6 }* k+ v8 c/ n
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 n8 `: N$ x& C: |8 j+ X
bankruptcy, they already have debt financing in place.: c/ u/ U4 N4 j$ ?4 q. N
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain' f4 Z. [( h. W
today. Y* J) e; f; Y& M# P0 d! x
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in- S w+ j; E8 L, t1 w- w* w
emerging markets have no problem with funding. |
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