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发表于 2011-9-17 13:16
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Current situation
; l- v4 k# _, [# J- f The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
8 f$ d7 F. M; kas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 Q* U3 T* B. P3 `1 m3 i' g+ R
impose liquidation values.
' e' d+ N9 Y/ N3 J$ J In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
& V* [( {$ u1 D9 O" ?August, we said a credit shutdown was unlikely – we continue to hold that view.
- m+ w1 ?, D7 \7 J1 ^3 I2 x The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' K0 U I% F! [& X! U: D9 U
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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, X# c7 a* x$ zA look at credit markets
8 a: D* o! {' S( v: J. J+ n Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
n3 M( n% z h" L1 \ HSeptember. Non-financial investment grade is the new safe haven.
/ Q( H5 b: a- I4 |( ]# [8 b High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
+ [# ~ A/ r- V& ithen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. ?/ M- ?) y, V" v1 l
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
9 I; F9 a0 S2 ~/ b; F2 B5 Eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 K5 v3 \. }; ^$ MCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
* h# v6 ], z6 h3 A: d4 upositive for the year-do-date, including high yield.
+ E% f1 Y6 ], |5 p0 S- R. V Mortgages – There is no funding for new construction, but existing quality properties are having no trouble- {/ I) h7 q6 k2 g, |% O
finding financing.
: E- S8 R+ |: y2 Y: s5 l* D' e: F Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they! ]* [' e* q; K0 b; P; {! E- n
were subsequently repriced and placed. In the fall, there will be more deals.
; l8 @" X. Y5 e1 L# w Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
! I5 ^$ e# z3 |( G% B: a& ris now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 B. b6 \% P6 [5 U8 Sgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" ^/ F! N* y5 F: y* L
bankruptcy, they already have debt financing in place.5 e g5 n9 M7 R [/ ]/ e
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% a |) Q$ e/ R7 t( B% ]
today.
; X/ X4 e, \. u) `; `0 f$ d Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
* P# n5 p7 Z' g7 Temerging markets have no problem with funding. |
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