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发表于 2011-9-17 13:16
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Current situation
- c; j4 {5 Q8 O, u3 m$ [9 A9 W2 |+ x The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long0 V0 S- P7 m6 y6 t2 O
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ t6 K# L+ @" @$ qimpose liquidation values.
2 \ N- b! v' C. F& g. J: |) N In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ l3 A6 y4 u) b7 a; X; ^August, we said a credit shutdown was unlikely – we continue to hold that view.
9 c& H1 S* o& S The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
( C/ p! b3 @6 _7 g. h) sscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.- K" V5 T& [/ ]# W; P
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A look at credit markets
3 a7 P1 ^3 U- C6 K. L/ @$ ` Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in: l: k. t: L Z2 i$ c6 I5 B. `6 s) V
September. Non-financial investment grade is the new safe haven.. K! m! o- @' f7 l. m5 p
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
2 n' C \3 m5 N, {$ T# Cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
, s8 |. c" { M7 C7 |# R: A: j9 mbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have# H; w! \ L- x7 }7 p
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; Z, z$ q& g& v! L7 ?8 m/ uCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are5 ~, e' i0 q/ Z5 a4 L
positive for the year-do-date, including high yield.) p: ?* V# Y- H. M( w
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
" ]/ N f% c0 h7 |8 ufinding financing.$ u* B& g( b0 C
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
: Q p9 i/ k" q8 r' I6 ewere subsequently repriced and placed. In the fall, there will be more deals.1 ^3 g0 u3 X; Z' }1 m
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and$ D4 Z l7 ^% | Q
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
9 |2 o" g# t$ h5 vgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" c+ g' \4 a9 F' l9 _9 ^2 ^- l
bankruptcy, they already have debt financing in place.: K' C A6 O$ C9 _1 \
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
2 L0 g8 s$ t7 b5 \. U' Btoday.
0 d+ C. C9 x' X Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
# `& ^3 a7 Q3 \0 Q/ F/ bemerging markets have no problem with funding. |
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