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发表于 2011-9-17 13:16
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Current situation
" R4 T- \% o7 d2 @( |6 @- j The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
2 }2 q* V: ` N" Qas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may9 F3 ^% X* K, L
impose liquidation values.3 D& Y. f6 F- L, Z, @, w8 B
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In; ?# Z* }- @: w2 c, c+ ~/ q
August, we said a credit shutdown was unlikely – we continue to hold that view." O' m } p( T
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension, a* u$ ]% W- Z- L0 c0 D$ E% k
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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: f# J1 N# n2 {& }" l$ sA look at credit markets/ C+ P: B" b& r& `4 X3 k
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
* A( d9 A5 n0 t" U0 w. n0 [September. Non-financial investment grade is the new safe haven.
; T- _' V7 G. n+ a+ B High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
; y: d/ P5 ^3 h& Ythen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1! G. S9 t& O/ N3 ~5 F" E2 ~
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* P9 L0 X& r9 xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
6 p G* l7 l' E6 _CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
! _- v `: K3 a: ipositive for the year-do-date, including high yield.
. z1 J @! I2 b, G, L& I Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
4 f' r) s& z: C F5 N: I' ]5 ifinding financing.
' a. \$ _1 u2 t6 _- @4 ^9 U Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
; {3 c! P$ x/ D( m' S9 z0 p/ g# Vwere subsequently repriced and placed. In the fall, there will be more deals.
! ^4 ] e" w$ T2 v Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and8 o: f( G n3 G- G6 V5 E! h" Y
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ x) e% e$ B* Y+ Z9 x) pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for! n* w) f' ?: f4 e9 X0 l
bankruptcy, they already have debt financing in place./ b- x k5 A) j3 @+ Q& M$ {1 _
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
7 ~, t, }! H& f+ r1 R- e! l' ^today.
1 \: j! ]! S' v( G+ o6 H: ]% u* q Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in m& @5 P" m' V; [& D3 x
emerging markets have no problem with funding. |
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