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发表于 2011-9-17 13:16
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Current situation
4 s# Q- x. {! V7 U- K# E) Y3 n4 v+ u The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
/ g0 O2 W$ x( o7 e' v- x6 r) i! Ras funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
& s! X N) M8 ]: ]3 n8 oimpose liquidation values.* C5 \$ H. u8 U
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
6 b2 k5 @/ u1 \; E1 o8 C# ^* mAugust, we said a credit shutdown was unlikely – we continue to hold that view.
g9 w G/ [( K. E5 }5 @9 o The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension" @ t8 }/ t% v% [4 Q- t
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.2 n% T! \ r2 w
+ j9 ]7 [. U& h( d( C e
A look at credit markets0 P$ S7 i/ P0 b2 O
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 Q& v# J5 n5 K1 w: ?6 w- R- ?
September. Non-financial investment grade is the new safe haven.
" n5 u O( L" C+ t$ q N High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%, z& p1 ^0 j2 E2 }& t+ K8 @
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $14 X$ Z7 v& U% P9 g6 K |* u
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* E1 i- U. @/ _) T& z% |$ Jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
5 x* ?" ~. p3 P7 n' c9 i: G/ hCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
4 ^. [. J) m$ D5 \! fpositive for the year-do-date, including high yield.
! O/ o& l) L) D! { Mortgages – There is no funding for new construction, but existing quality properties are having no trouble, I3 i) l- Z* m7 |! S$ w
finding financing.! i+ V7 ?# d5 a4 l8 y. h' v1 v# Z
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
: V6 z: J6 V% L' a7 [4 \4 W+ uwere subsequently repriced and placed. In the fall, there will be more deals.4 y! C8 l+ o* b# i M7 a) A% G
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 H" u* k) v" V3 \is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
4 u2 `* Q/ `1 n7 x, d) |! Ogoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
+ n0 |$ o" X; R8 Kbankruptcy, they already have debt financing in place.
1 f2 v4 J/ A) d European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain" H7 j" ~/ j* Q3 H
today.* l0 ]; R2 G/ H( G3 k9 J
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in; G$ ]8 B2 a3 _- C/ x6 T+ n+ p
emerging markets have no problem with funding. |
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