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发表于 2011-9-17 13:16
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Current situation
2 `* T" c2 E, p/ c) @8 W The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long; J! l5 a9 j% E5 D& \7 o
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
2 t$ o( y `1 `+ dimpose liquidation values.
) A: d. i4 ~8 g" F& N In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# F8 e4 n* h; @1 `3 _August, we said a credit shutdown was unlikely – we continue to hold that view.
9 P$ Z7 G/ g1 ~1 {% g1 W% A) R The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 I% Z1 b9 i( {) H! r3 x& p
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets5 y# G: f9 C, G- z8 i# ?. @
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& G$ N. R5 U; C8 r. g5 zSeptember. Non-financial investment grade is the new safe haven.
# g' P9 |8 m4 j9 @3 B High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7% [: {* B% i# y+ q
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $15 E1 b0 U. F) a4 `
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
9 Z' @ X& c/ h7 d' T9 b; zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
5 W) c2 C; M# M8 cCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are$ G y5 R0 d- _0 J& g
positive for the year-do-date, including high yield.
0 f# H* M4 O8 ^9 _) t- d" L1 o Mortgages – There is no funding for new construction, but existing quality properties are having no trouble' o3 ^" W, V1 O+ T6 x* f9 t
finding financing.$ N9 ^( x8 |( e8 C
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
- Q. }4 d/ z4 H3 \4 L# b& ewere subsequently repriced and placed. In the fall, there will be more deals.
+ C0 D% ], r/ I" X5 P/ }; x Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
# t! {2 W: \: A7 t1 l7 Vis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were! ~/ c7 |$ K3 o4 G5 j
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
" B! J+ U+ d# B% Wbankruptcy, they already have debt financing in place.5 M. W( N/ ` f. f$ P
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
. W7 W9 t8 M$ N( x1 z, Atoday.
+ }; K6 C4 _* X& s: K6 @ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
0 k$ X+ P. i! Y, q" w+ yemerging markets have no problem with funding. |
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