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发表于 2011-9-17 13:16
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Current situation
, h# y& H1 ~; f The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
' b4 V& ~5 w/ V9 r) Ras funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 d8 V: A# t( }# h3 O* B- pimpose liquidation values.
* P3 L# p! o+ k: _& K In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
$ g$ W+ {# P3 Z7 zAugust, we said a credit shutdown was unlikely – we continue to hold that view.
" y5 H) Z' r4 W) i" J I The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ I& \5 ^: O- P' m* {" r& S
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets0 o4 J8 B1 v1 R" }
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 z- p* o+ x) r1 @4 @% J
September. Non-financial investment grade is the new safe haven.
5 d1 o; [, X9 c/ T0 q" [5 j6 w. { High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%/ V1 J& c4 k: W; |% }! F
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
6 ~1 @8 r* ?; N# }6 p4 _billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
7 S5 a3 T G9 {5 w7 X$ S% Paccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
1 V' Z4 v5 v6 T1 ?* c# j0 ECCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
+ I$ I: N- B. E4 E: Y& C/ t3 cpositive for the year-do-date, including high yield.
& m z4 J/ X T0 q. I2 U Mortgages – There is no funding for new construction, but existing quality properties are having no trouble& I, p5 ~* q3 {5 ^
finding financing./ T+ l2 C% g; P# Q, |# k
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they/ x( b# w+ {& g
were subsequently repriced and placed. In the fall, there will be more deals.
5 T. ?/ {0 [# i+ A3 W Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* J) X2 }% e5 U+ L1 K3 Zis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
, M% ~' y7 a/ f( r* `$ mgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 Z) d, J% u5 b6 l- B) Q
bankruptcy, they already have debt financing in place.
a1 ^( L8 K$ m* t European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
/ `2 j8 C- B' _- \3 G0 A; Htoday.
- c) z4 r8 c5 P% G9 C. g# _ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
7 X4 @7 X( C2 G" memerging markets have no problem with funding. |
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