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发表于 2011-9-17 13:16
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Current situation
3 {6 ]4 ]$ t9 k! l9 h2 x The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long1 C* e" ?. u7 Y% p' {1 K: K9 S
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 k6 |5 O7 Z7 ?/ L! o7 r7 ~& m3 D
impose liquidation values.) i" Q+ e1 ]/ X7 N3 i, j# Q
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
1 O( ^# j o. g3 I( m) ~August, we said a credit shutdown was unlikely – we continue to hold that view.- s2 c& Y* G2 p/ T& g
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
: a- ?0 c" r% K% _" s# t( ?scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
1 l* j- L2 Z* U# m! h* F Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, b) J" R% t- @September. Non-financial investment grade is the new safe haven.1 Q5 [( |) J1 O# S0 K
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 ~3 }3 }% t2 E b
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
+ [9 m" t7 ~7 x N* T# \8 tbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have$ V4 q r8 s6 p) e4 Z4 J1 z. J* Y: Z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 K3 `/ D- M7 o* h3 }3 z# L* b$ d
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are0 u" v! p0 q8 N( V4 J: E
positive for the year-do-date, including high yield. d% t4 p* K: q
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
2 e( q) Y/ T' q* q ofinding financing.
% ~7 L3 h* h Z) G: o Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
8 n6 s6 e) b9 k5 t- s4 Lwere subsequently repriced and placed. In the fall, there will be more deals.
7 h+ E2 b/ a: c+ y C+ T4 w! a Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
' H1 K3 c9 j( C7 E7 @9 ois now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
m: z% U' j" F4 v( E4 ~* @going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for) l7 u/ h: E, M* E+ z( s
bankruptcy, they already have debt financing in place., t! L" r4 ]# ?+ E6 k
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
4 Z. p( s1 N! ~( M: n$ T% }today.
5 @6 E" d. ~. E+ T$ y- k Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
* i" \3 E) K' Q+ iemerging markets have no problem with funding. |
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