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发表于 2011-9-17 13:16
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Current situation X9 w7 Q! h' W* X) `
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long1 _5 U" U0 j* R+ i
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may) S) Q4 k( k% h3 A% V( ]
impose liquidation values.
/ [9 b$ ~: C( U0 W5 R" Q& D In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In9 y X1 L$ ^1 F8 F! q
August, we said a credit shutdown was unlikely – we continue to hold that view.
- i. Q0 ~. e8 N. d0 N* _0 T r' \" z1 R The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension2 ^' w* ~* u% U `1 ]* T! h l
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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) Z, k8 I/ I2 C0 C% y1 A* OA look at credit markets' g; F u% Y( w2 {
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# R4 D. k4 D3 S& ]September. Non-financial investment grade is the new safe haven.2 @( r0 f# {" }) {/ g- e
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%* [: z' f$ e6 P1 ]4 z. P- r" J, S
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
D' j1 I& B" c, ]$ qbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have8 k% o8 \$ e0 B' }2 Z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade6 R; h6 D5 K9 S; @
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 o; I! N- E- ]5 d3 S1 g! mpositive for the year-do-date, including high yield., |/ U, h3 { h/ O
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
0 ^' X8 A1 Z$ V% E$ kfinding financing.5 n5 X' U" ^5 _
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- `, o# B2 H3 a& C
were subsequently repriced and placed. In the fall, there will be more deals.- [8 b7 Q, |( j! ?7 H% f% [0 W
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and" c8 H e: [4 I4 p i8 n" F
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were& i3 j' T g7 n9 p+ ^
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
- f |& X% v- @# b* [7 w+ G0 nbankruptcy, they already have debt financing in place.* j% r/ y4 a( Y' g3 x; _
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
) N1 l: }6 V6 r) m d1 `- x0 `3 a) htoday.9 h" u1 q2 M* ]- z
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
* {' H4 Q3 J, w- ?, ~! }" z gemerging markets have no problem with funding. |
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