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发表于 2011-9-17 13:16
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Current situation
, U- O( q2 W4 D# U The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
: F: w$ g, a5 cas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 R5 L0 a: t' T0 D
impose liquidation values., O# j, K# e. q. `# D9 d% x& }
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In2 o, p0 Y/ H0 T( x; ]
August, we said a credit shutdown was unlikely – we continue to hold that view.5 G9 B% Z5 y# i$ h# A7 r1 o5 |
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
8 _1 Z2 F: K: t; Vscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.$ p' v( p" f/ d |+ _1 i2 b4 u4 n- _
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A look at credit markets9 n: i) @$ I4 W" `
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in# C, I- J$ g( z& m
September. Non-financial investment grade is the new safe haven.
3 \! I0 A5 Y8 w High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%- x6 V( V9 E9 d. R: ?: u
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1% \3 A3 D: o- y' F, ?# @
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
/ t, e9 P) [& ]& T- Qaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade' ~5 M' }5 z) `+ K- u" r/ h/ N q
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are' y8 N: f$ @7 d5 c7 H
positive for the year-do-date, including high yield.
7 H4 [# m4 D& X$ j Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' J. S+ P; w: k; O% q) Rfinding financing.
# F+ W5 x$ D3 }, a Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
% i, J1 h% [1 F$ q! H& Owere subsequently repriced and placed. In the fall, there will be more deals.3 x, J" ?! z7 Y. n, l) I
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 ? J) g1 j% B! y+ ]! n# h
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% j- [: O% p! o% w# T# E1 A) ]going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for; t, `9 @$ a7 y) [ k* H& x
bankruptcy, they already have debt financing in place.
2 z. H C8 f9 R European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
, n" N' N+ g! I. L( F# x% Rtoday.
4 E7 k, u1 R2 P2 s$ r7 P7 o! R Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
1 t$ @- S9 m$ \4 z7 U' Eemerging markets have no problem with funding. |
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