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发表于 2011-9-17 13:16
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Current situation5 w( e3 E9 {. d! V
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
3 O/ w. u b5 L, A$ m8 O& Tas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may# ~5 e7 n) i4 p7 M5 h
impose liquidation values.
) u0 |/ L7 K; E/ Z In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In9 [9 u) G4 K4 o9 A5 A
August, we said a credit shutdown was unlikely – we continue to hold that view.+ Z8 O2 J. g& v' `* [
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* w+ _3 l* Q% g/ `; e4 Z& r, |0 S
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* h0 D: W% X/ x1 l7 J" E
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A look at credit markets
: p- y+ f& S7 s Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in: w1 n8 [, U( L
September. Non-financial investment grade is the new safe haven." i6 J! m3 m5 l4 b- |9 m, s
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! E. W; k: j; i* [
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. t( w1 p) b/ R
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
3 Y7 {( @: J6 e1 ]. Q$ p1 Xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
! |. V' T2 x' eCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* ` [/ c- }7 J
positive for the year-do-date, including high yield.
9 D/ `& M9 ^3 |* y Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
9 Q, }3 Q4 h; b# Q: K0 I r& cfinding financing.
/ X. s/ L: k0 E4 x m5 H' j# ~ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& o) o& _; A, u1 b& L" wwere subsequently repriced and placed. In the fall, there will be more deals.
; ^" P/ Y E" b5 P0 U! g Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
( o8 P4 t' A7 h+ u! n1 a/ @is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
; E# n7 d. {3 m( C: J. x9 L* {going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for0 c1 Z, C. w4 r4 J x9 o7 q
bankruptcy, they already have debt financing in place.
) g/ y! z# G$ X8 N: u4 j6 T* c D European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain4 h2 Y, T+ M6 Q; {
today.
: r# k% l# {: t9 P Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
1 n" w. e8 \$ ]( }emerging markets have no problem with funding. |
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