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发表于 2011-9-17 13:16
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Current situation
% P6 }+ g# g4 a! _7 c The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
4 I3 @8 n7 z* X( u; ?as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ o1 ]7 B# P0 J2 q) o: himpose liquidation values.
. S7 M! g6 a0 j; F/ ~1 h In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ Z7 u# e$ E" ^+ ^& K2 RAugust, we said a credit shutdown was unlikely – we continue to hold that view.% r& { c V5 g6 x" V4 d
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension2 p( c- m/ Y7 t
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! J5 ~5 C9 u, w
9 k J4 e6 a9 U' KA look at credit markets, Z4 W! F; R7 D+ c
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
0 k1 a# Y' `% q2 U+ ]September. Non-financial investment grade is the new safe haven.
4 m2 y7 [* _! e1 i h1 k High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%/ }: V9 Z7 r& k" J2 U2 s) M
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 {4 z, v" Y- Vbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have! ~" v1 y8 I/ B* A W% s
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
, _. G( B V" A6 L) l1 xCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
& v B& {: s0 }positive for the year-do-date, including high yield.# d% P6 U2 z: h8 B5 Z& W
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
% h* ]% t. V! {, Y0 Yfinding financing.8 E( P% z+ j( S+ H: ^3 x% \/ `
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 ~2 \ A9 U; i) V( c! T5 S' n
were subsequently repriced and placed. In the fall, there will be more deals.
, o$ k0 d4 v) ? Q% W' n Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and, K3 V( G/ t' k. m
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# W8 ^; Q" k& x% m: p0 ]$ s* H
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
9 g) ]6 I" P8 @ V0 ?bankruptcy, they already have debt financing in place. o! f8 b/ R5 T" w$ I0 J; r
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
- i9 _7 ^0 ^; w' ctoday.
% H8 ^ F* s9 y- I! n( O" b4 s Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in% d6 h9 j7 g+ _
emerging markets have no problem with funding. |
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