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发表于 2011-9-17 13:16
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Current situation
) M; d k. P8 k R The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long' o9 }" ~& t7 I/ q9 _
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
: {3 @7 }: j& t+ U/ f0 eimpose liquidation values.+ w/ y! `* l1 j) J0 A
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
( E- t- ?( }* T9 yAugust, we said a credit shutdown was unlikely – we continue to hold that view.
* D4 H5 K! p& q6 N The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 ?- Z! F3 v% v5 iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets+ v; f6 \9 Q$ _3 S
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
$ N g. X. I+ Z' x% @September. Non-financial investment grade is the new safe haven.3 Z) Y" T* V; t3 s" |( P
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%+ Z* g- \" u; o. K6 h( X" s' Y' [2 x
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $19 P. F. q/ N, P; ?( R
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have# e$ u3 ~) _6 V( Q" U
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
4 L/ h0 l( m' [' x0 m) n( DCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
5 u1 v8 t8 b y4 h$ Vpositive for the year-do-date, including high yield.
" s. L! ^2 `' }: P7 u ~: S Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
. k9 |* c: g# ]" N$ bfinding financing.# m* g9 B6 u6 y1 a2 a3 @9 T
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they# ^2 C4 Z* U/ E: o
were subsequently repriced and placed. In the fall, there will be more deals.9 Q- p& W- D1 Y0 u! z2 Z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and0 R: P5 C. e/ }5 }6 E
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were3 r# T' [5 p6 S, y+ c6 N
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for; x" j2 X, U2 F: |, [- y; g. ] c
bankruptcy, they already have debt financing in place.
! ]" g/ K# ^9 y$ b2 a: ^3 y European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 |$ q! C& S1 {$ H
today.& [& k+ i/ L* j
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" b2 O! c( @- b; T
emerging markets have no problem with funding. |
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