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发表于 2011-9-17 13:16
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Current situation
/ S8 p, q# L0 a5 u. i% r The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
: F8 L& T& c% i; g V' k. d, Xas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 Q, c3 T- J! z
impose liquidation values.
* n1 }) X9 i, ^) b In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* t7 C9 b, F; r. m2 mAugust, we said a credit shutdown was unlikely – we continue to hold that view.
$ T! U# Q# Y& a; E& C$ n The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension) d/ \1 V4 K0 U" e2 W; T2 k
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! _, j+ _6 k; y; F
9 R, G3 D8 |' AA look at credit markets6 u& @ c/ V: B2 p! I* l
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
5 F* v. ]6 V! K( e, Y! A1 _: bSeptember. Non-financial investment grade is the new safe haven.
8 K- u/ L; v5 F6 X High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%$ b$ j4 B z) L( [
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; m, X& b4 [2 D: Xbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
- I( ^6 a% }( ~& ^8 t8 {! k/ g0 Waccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade7 y2 v7 u, M9 j) k
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- B" w4 {/ [4 F, ^4 U7 wpositive for the year-do-date, including high yield.
1 b4 l7 |! A) ~5 H6 G9 S/ s$ W Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
# `* {& ?9 }0 N% cfinding financing.
, D" e2 E: m5 R5 x Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they6 K* p# w' S+ G% w ~
were subsequently repriced and placed. In the fall, there will be more deals.& `& n( z2 ~8 M+ m4 D
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& A1 [* T1 c: h! G
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were- B# d1 [$ Y& V0 ~3 s' f% n
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
8 ~3 a8 ^0 \6 s6 ?& Ybankruptcy, they already have debt financing in place. I- @) F6 V3 s) V0 s6 G' X
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
: P' ~6 s& _* L$ O) u9 U/ Q* k: wtoday.$ U0 {. N' q. {
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 o# [( j6 J0 b3 memerging markets have no problem with funding. |
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