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发表于 2011-9-17 13:16
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Current situation
) W8 Z) Y2 D: V% w- [ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
) A( B7 O, \5 ]5 u( I1 Has funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
' ^# _ i- M: J6 cimpose liquidation values.
5 z F% U9 D% q6 a0 z In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
& v7 R( U) Q6 m" a1 rAugust, we said a credit shutdown was unlikely – we continue to hold that view.
' e$ Y q8 p- Y" w- r The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
- X1 d9 d& n- Z- f7 hscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
4 X$ C2 G0 v5 e3 u: v' w. t Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
6 q+ X3 l8 A+ z6 X9 NSeptember. Non-financial investment grade is the new safe haven.
" i8 I! ]3 a# `6 L: z4 z1 F High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
; }$ L" E: ?2 A+ r# Y/ D* wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
/ c+ v" _% f% N# _; |/ U0 Y- zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have" k/ O; h4 s t" j
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
7 i! ?- W" Z( N# PCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
( I, e" ]- f2 \: npositive for the year-do-date, including high yield.
0 u" f8 ~8 R: U6 _1 y, | Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
7 G5 @1 L! \! K2 z2 t9 w: Ffinding financing.: }8 T' E$ r8 m
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
: _7 L! o( J- y( @! d9 \+ rwere subsequently repriced and placed. In the fall, there will be more deals.: f( G7 ^) b {* @1 o% I& k" x
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and$ g" h0 T% C5 L7 \) v
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
6 G4 q% F% o9 E5 k9 H, P* a3 g& F7 Bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for3 l, f/ `( G/ V9 Z9 k
bankruptcy, they already have debt financing in place.+ N0 |' ?4 a. u- h6 ]& G. a: z, C
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain _. D. m! B. F: h& c4 b, F" H
today.
+ K; i9 U, m# ~5 A7 ~0 \: J Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in* k! ` q+ S7 s( k* G% T0 ]8 E
emerging markets have no problem with funding. |
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