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发表于 2011-9-17 13:16
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Current situation* _9 z) z2 _3 ? N' G( B
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
! w$ Z; I; t5 I: e; { z. las funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# b0 e0 R7 R: w+ f; F# eimpose liquidation values.
0 M* O& {0 O3 L( V" m In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
" W9 p- Y) o, @2 ~3 o4 F- dAugust, we said a credit shutdown was unlikely – we continue to hold that view.
+ s! I/ ~* g" J The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension/ V& n. v) K) ?) B6 J
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
1 G; v# u) `! H) _/ f8 o4 @2 w# t
; ~3 H( N- K- j9 QA look at credit markets
2 j1 z& @3 _# j; L( R( s, r Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, u9 W. z( M1 @; h" X2 Y1 j( ]. ^September. Non-financial investment grade is the new safe haven.
; A9 @- T3 o0 Z, ]: k$ p High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
' f6 x$ D t- ]# X3 d. [% Bthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1! \+ v+ t* V- a0 ?5 \
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
& @& {- l" @9 ^access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ R. q. r/ Y- X! ?* Q% `( }/ C
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
6 S8 O0 [9 e8 s/ a# a; m, \" o, kpositive for the year-do-date, including high yield.
- j$ d/ D/ g2 u7 ^8 A( j Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
, u' _* f6 \ S3 } s% yfinding financing.% k& g2 |4 G g) `% [
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they# Z# H7 g- x2 D4 r* D
were subsequently repriced and placed. In the fall, there will be more deals.
- g r3 R1 F0 l9 V6 d; n$ z/ I Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and) i% v5 |* w8 i; T# ~9 n
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
, m, U6 C/ h# H* I Pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for; |+ a: {5 [3 f( M9 }* R
bankruptcy, they already have debt financing in place.7 @: M: b: u1 L) i
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
# l" G! p( x# ?' Gtoday.
4 F0 m( p8 Z& D! T; a" J" |( K Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 c9 _, D5 Q# g9 uemerging markets have no problem with funding. |
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