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发表于 2011-9-17 13:16
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Current situation
) o: t$ L3 R+ V7 U, ` V; a; j The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& S' [# m' x% d. [3 t3 G& Gas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
H4 O" j+ T/ L8 ~+ jimpose liquidation values.
" S0 _6 v1 j1 E# u In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* ]" j9 H4 a- A3 W8 dAugust, we said a credit shutdown was unlikely – we continue to hold that view.% A! d) {( H# z, ~' e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
3 c2 l' K$ j! w0 e# j2 R! ?scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets4 V9 E7 e+ y0 x' X# |
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
! y* q- e& K2 h+ k {9 a5 |% bSeptember. Non-financial investment grade is the new safe haven.
2 J! f2 V& Y; ?+ W$ b+ l( x High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%4 {7 e* T' b) {6 h" V3 q# b
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 t' N! }9 P1 c" n/ S- g1 {- O! X
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 b7 B3 m9 a* Y! W) gaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade1 F: s+ J1 m8 t$ r( q6 d
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" F- t" k7 I' S6 `$ Upositive for the year-do-date, including high yield.$ j8 ?. ]0 x+ E) f5 G7 y$ ^+ W
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble1 j2 y; I o' R/ u9 {. A
finding financing.
7 `3 f) t! l: R" Z" `5 |+ [ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they, u( \" a4 f+ V$ j' x+ G" i
were subsequently repriced and placed. In the fall, there will be more deals.0 V/ C5 \. h3 o8 T J
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
+ g* t. m* N; a% A+ P) {is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
3 l% u0 V7 L% f0 ]' f0 Ygoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for8 \ l1 V8 \2 Z$ X( P
bankruptcy, they already have debt financing in place.3 S4 F( y' B9 j2 K) i( x1 G- Y
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain- U0 F) y' ~+ L2 G( u& Q
today.# v4 @$ W, y3 j! Q
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in0 s! V) A. f* b: w3 j
emerging markets have no problem with funding. |
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