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发表于 2011-9-17 13:16
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Current situation
6 U1 l0 K- d3 [: u% n: A# @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
! \8 n7 V1 x2 Q1 j+ x- }) [0 nas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 t# f5 X6 \8 ~% eimpose liquidation values.8 r, o) i% y# A4 p; ?- ]0 z: _
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
! C: ~- p) x: fAugust, we said a credit shutdown was unlikely – we continue to hold that view.
& o) I& g2 y+ E9 p' L: O The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension5 }; U; a1 W: j$ C
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets4 A+ G0 c& ]1 N. ^
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in. r1 w5 q. Q2 L
September. Non-financial investment grade is the new safe haven.9 W' r" o4 C- F1 a' G: n0 ?
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%8 b# f0 l( @& v% t& Q# H
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: g& O3 L' L7 b- @
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
; v) k# j5 D7 t' {access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
0 i; e$ I3 R1 Q9 w) y8 w0 oCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 Q, D) ]! x& \2 \9 D
positive for the year-do-date, including high yield.
2 Z6 K, [2 h0 [/ p- c W% ]# q Mortgages – There is no funding for new construction, but existing quality properties are having no trouble5 A" ?; H) R( l5 x1 v6 {$ a; J
finding financing.3 I) f- [5 f- y( R
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& H3 L8 i' ?$ c- h5 vwere subsequently repriced and placed. In the fall, there will be more deals., D. F3 z- `7 g" O6 D
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
4 H7 k' i7 s# c$ J# T% I9 ]$ Tis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were! g3 u9 X% s) H7 U! B6 w
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
! y6 T6 u, m, @/ }9 Fbankruptcy, they already have debt financing in place.
7 o* R9 T5 d( h# F2 ` European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ Z4 C# b' N2 J
today.4 k, W3 Y* |* u; x7 L! A+ v; _* p
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in( ^, z1 {5 O0 H/ w/ V
emerging markets have no problem with funding. |
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