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发表于 2011-9-17 13:16
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Current situation
/ ]5 k# D- K; n. N8 _1 Y7 ^ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long6 {- n Z5 u U* I
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
0 x; Z3 a; [5 B/ _( n' Uimpose liquidation values.
0 b6 z; S4 O G- K- W: [ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In9 @- |% m# d+ P3 t( M: N0 O d
August, we said a credit shutdown was unlikely – we continue to hold that view.: b$ \' D8 r$ y) q8 m2 |
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension2 A7 z- R; v4 h% y
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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2 @: D4 L7 l5 u4 N9 U& h( eA look at credit markets" W- i) {0 p. c6 J: q
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
7 K5 P( @# A& j1 o/ |1 P4 USeptember. Non-financial investment grade is the new safe haven. B( x2 U. A" ]% u
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 r5 i/ B" r( N
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
7 k, E4 I. j$ J O% u; `# wbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
# f. G8 `% A7 v6 n$ waccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
2 F# Z/ }0 Z J' y: _$ J' ACCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. G2 Y2 W4 l% \8 G
positive for the year-do-date, including high yield.
! ]) C" y: m* d1 h# {! U Mortgages – There is no funding for new construction, but existing quality properties are having no trouble2 X! [; s8 {9 W& k) r% I/ O: R# c3 ]- l
finding financing.8 L5 t/ [& ]3 F: K! B* ~
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they; m9 m5 t+ m V
were subsequently repriced and placed. In the fall, there will be more deals.
2 y, |) j- W5 ]4 `) X! S* j; z Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
Y* E2 S4 Q. C8 V4 B3 m j$ Qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
2 o0 k: g ]% ]8 I7 Pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for$ A6 R9 ^/ ~( x5 n; H" _1 W( \
bankruptcy, they already have debt financing in place.6 s( W, z" D: J
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain8 d% w4 V, F$ ?0 ~0 _
today.; F& p2 i7 s7 I- y
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 e+ f; M9 y) C zemerging markets have no problem with funding. |
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