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发表于 2011-9-17 13:16
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Current situation7 D6 ]" V7 N3 ?4 c
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long7 ~1 m. v% n( k: K; M c
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may( |$ M# D+ |1 @& I \; t. ]. k
impose liquidation values.& L% g& |1 H) p
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) j3 h/ }( F1 F& @4 T0 vAugust, we said a credit shutdown was unlikely – we continue to hold that view.* ?) H4 B0 u' _+ |* e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ D4 k A+ P# H+ F6 R& s& [; l* Kscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets. A( [, B& _5 M. I( m& C3 I
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& k) j5 y0 [/ M5 M+ @! QSeptember. Non-financial investment grade is the new safe haven.% j- \3 v1 E9 w( F1 y
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 T! O: f2 E4 I& F6 ?9 S* G
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
3 t. P: H; o4 X! y3 I$ sbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have' J, Y& _0 v2 x0 K% W" c
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; j# L& Y' l e2 O% ]4 i: mCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
6 y$ u1 X/ M" q/ @positive for the year-do-date, including high yield.
2 o" `9 J/ k4 H6 \ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' u4 T/ _: N% [1 ifinding financing.7 r1 T" R8 b) \$ x
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they5 N2 c+ N8 c8 e5 d: _
were subsequently repriced and placed. In the fall, there will be more deals.. `6 W7 }5 s2 k( w
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ r8 A" Y% r" R5 p: B2 u
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were9 v# t) m; k. c* m
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for- Y* q/ {2 f1 P0 p% w0 w
bankruptcy, they already have debt financing in place.& V8 B" @0 t$ w7 L# ?( ~& ?
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ ]) C S" D; D- Y
today.+ Y% ]1 G, [% V5 @
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in( d. i1 S' a2 Y0 h% \8 g* n. v) B
emerging markets have no problem with funding. |
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