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发表于 2011-9-17 13:16
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Current situation
3 O4 r" E5 G7 e- t: Z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long) a* {, [5 W9 I$ V
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! X- s$ ^ [8 _2 {+ d% Cimpose liquidation values.
! R) p! R) R s6 ~, j( w3 Z In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In: ?2 L% _7 M$ w* _% \* Q
August, we said a credit shutdown was unlikely – we continue to hold that view.
: `" W" t. T7 c3 a- K The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 q |( U* V B iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.& m, L( A8 I; a) V# N1 x* k
- } E7 t( h, }% e9 }
A look at credit markets
" t5 S- L/ F) k+ s/ B Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 T6 `4 ]% W/ TSeptember. Non-financial investment grade is the new safe haven.$ {9 \3 ^, u/ Z" m0 C7 l
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! C! v0 Z9 B3 s* }# h4 s8 d. f `
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
" d4 o0 o5 N. |5 Fbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have" I: x3 D8 y5 q& [- w ?
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade* N4 ~. c0 [" |& F0 e4 ^
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
& n- E* F v1 \' d B, l9 G* epositive for the year-do-date, including high yield.
, v- A- s! D3 _% ?% \) C Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; ]/ |8 d6 l2 e; A/ [
finding financing., Z) @2 L: B9 B4 K+ Z' H# u1 q; J
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they5 {2 u/ U y/ I$ A; A* N3 i$ A
were subsequently repriced and placed. In the fall, there will be more deals.* e% s) O' l1 b
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and; n, q6 e$ X& e ^* h6 b8 T
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
+ n. w+ {9 n2 q6 m! \going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
2 a' g: W4 d% {* y9 p gbankruptcy, they already have debt financing in place.6 R6 K2 _8 S7 U( [
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain8 A: M/ g3 s- W) g$ G; z
today.
- r/ {3 t7 d- i# N/ ? Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 s' q; D* h) d. Temerging markets have no problem with funding. |
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