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发表于 2011-9-17 13:16
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Current situation
0 q) R, t) h; ?8 V8 t The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
* R! j2 x/ a4 X. V' ^- eas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
3 C& B- W6 _& \: x. Z: Kimpose liquidation values.
/ n/ _. f+ Z+ t In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In( Z1 \( c# Y0 B) N) q: p
August, we said a credit shutdown was unlikely – we continue to hold that view.$ n- q; R9 f! Z% W* r: _2 F: p6 w3 R
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 O9 a' N/ U" J; D6 R- b2 e+ B
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.% L. B. r/ `' R i6 w- \1 S7 a
" {% {0 |0 w- Y+ f3 i: d& d
A look at credit markets# j$ j/ v7 E( X; y! A6 g6 S
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 {) i: I& t ?$ b- G! }September. Non-financial investment grade is the new safe haven.
* j8 F; J8 M' z' y5 I9 J" ~ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! `' _: e4 `& r& d6 P o! P9 Q9 Y! N; lthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1/ R- [5 H- t9 h7 N
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have2 J& s7 s/ ~# Z1 p, Z0 _
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade; i# T. b0 ~ C* |, R
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" w* W0 w+ x9 a; Opositive for the year-do-date, including high yield.1 g- q( \( O' q! T& G1 |2 K1 E
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
4 h, B1 R+ {. ~) Vfinding financing.; V. @( }4 K1 i4 U- {) b
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% V4 P" i2 g! }# H1 n+ ]5 d6 k
were subsequently repriced and placed. In the fall, there will be more deals.
9 m5 h$ d0 r1 p$ _- p. n Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and: ]; T, J0 W# z5 T G
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were/ `5 P7 e: h" F" I7 U
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" _9 B3 @. P9 F7 `# _7 x' u
bankruptcy, they already have debt financing in place.7 D _+ N& _* b8 o2 u8 @0 H
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain# U/ M( i8 {4 B( }
today.) O7 T1 i' K) h% U$ X3 B
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
! r- Y0 X8 q P+ Aemerging markets have no problem with funding. |
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