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发表于 2011-9-17 13:16
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Current situation
( ?+ S2 |% S/ N2 P" Z3 c! w The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
; t; R: A/ {0 s3 \" u8 y5 e( cas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 J; c5 c- [9 G, N8 d- C8 |" m
impose liquidation values.
" ]8 U7 `8 U8 T; O" E5 g$ L In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
; h* m! y$ e( E/ [& j- y; VAugust, we said a credit shutdown was unlikely – we continue to hold that view.
7 C! Z9 ^" f, Q' R The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
i* a. S4 X; O x- ]: Sscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.1 f. d) G* Y4 }- m: ~
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A look at credit markets
6 X, G) Y; ?4 B8 a3 ~9 X Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in) u2 w9 o4 ?1 u7 n) ^7 t8 d7 h- r
September. Non-financial investment grade is the new safe haven.
; n8 S5 t1 q2 y% f, e High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%' z! s$ j0 c8 y( R
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
9 ]; b1 d& ~* k& ~ R; A: Cbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have8 }8 s5 G; F0 g# j
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
: Q( h1 y7 Y, Y( GCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: c2 R7 T5 h3 Y, V& N* Q
positive for the year-do-date, including high yield.
- w& K! K& h9 l8 T/ [ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; [& I$ n5 E7 H5 j
finding financing.- @- M6 I; c& M& j* y1 N
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 d2 s2 g' d; I/ X- @$ gwere subsequently repriced and placed. In the fall, there will be more deals.. \, @7 `, i# w
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* p( Z2 g1 N: T# ?* V+ \) f
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were- F% J! y. A" U
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 ~8 B7 b7 ^7 G' _; u/ A
bankruptcy, they already have debt financing in place.$ R* c! v+ G" ?/ B
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
" }) @! a4 r& M* dtoday.
0 p: d3 d- |" \5 {; L2 d$ F; `6 ^ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in d& \; Q$ F1 O
emerging markets have no problem with funding. |
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