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发表于 2011-9-17 13:16
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Current situation
, z/ u0 c4 H: E6 O$ L0 i1 b The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
) X7 l! h8 B4 u2 Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
6 G3 j, M% p4 w6 N) k1 y/ E1 Aimpose liquidation values.$ t9 [6 {8 W) N
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 U% f# H* |9 P' k
August, we said a credit shutdown was unlikely – we continue to hold that view. `/ l) g: T; }4 W
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 t0 A# C' e" q- R7 yscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
& r$ o% f" s6 Y0 g/ O; q9 R9 p& @! W$ S
A look at credit markets8 o$ ^0 d' ~2 Z; D( Q/ S' }
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
+ p2 n8 M8 F+ u% lSeptember. Non-financial investment grade is the new safe haven.) s" y* U+ X2 f1 v* v/ e
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! m M! V1 O) K5 X
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1- U& q% ~' _, t9 B9 n
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have2 _6 D! d; E" _" Q2 n- d. p
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade8 A+ F R* h) `9 \
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are& I6 y, G' Y0 A) \1 g; i1 D
positive for the year-do-date, including high yield.2 t, t+ `6 U K" O( C, h# ~
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble0 L8 O! F u6 b! h' p! n
finding financing.& m( \8 @4 q8 d+ {. U
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
0 @ S G6 @* _; Z4 u- Hwere subsequently repriced and placed. In the fall, there will be more deals.
0 D; u: f' i6 m( s0 n3 C( M. V Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, [# t* [* y+ ?/ ~4 V. s/ g- {is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were$ P( v0 @4 p. W$ C
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' T- b) x( h' N- o+ Q# G
bankruptcy, they already have debt financing in place.
( w4 u2 c1 M2 r. l5 z3 x European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain8 q0 I0 e+ I3 F- W8 a! m8 T9 h* z/ N
today.. A3 P/ h$ f4 V5 o' F8 }- C0 A
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# [ o& \- |4 k* m2 Z% g
emerging markets have no problem with funding. |
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