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发表于 2011-9-17 13:16
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Current situation
4 p' O2 u2 C8 e! F" | The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
9 u+ I6 j* M; n9 Has funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
- z+ W( ?' c ?1 Bimpose liquidation values.
! P& T9 M- C* O2 Y; `/ c In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 H) r- h* b$ `; T
August, we said a credit shutdown was unlikely – we continue to hold that view.
* K( w, ?$ ]# @* ~1 I' m The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 Z# W% O) }8 f) P$ o+ s
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.+ q1 U6 l7 R4 x! h( m! C- C
2 ~2 M4 k4 i P( Z1 zA look at credit markets' w( ]( e) B8 n1 j9 w, m
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
$ c) O) n+ e$ P( X% ^September. Non-financial investment grade is the new safe haven.
; h7 c% i& A: x0 H# [6 l7 v High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! t6 t' U+ @8 b2 w( G" o
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
. w/ L% P, b, `8 rbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 B: t* Z9 Y# ~3 U8 k
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
0 m$ X1 I8 o( A0 iCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* ]( L2 {6 r. T
positive for the year-do-date, including high yield.
$ a. N7 I. O9 P Mortgages – There is no funding for new construction, but existing quality properties are having no trouble% s( l" z( @* q5 M% _! ~' z
finding financing., @, S' w3 U7 \/ }3 X3 H
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 U, E2 q |; n0 q0 ?" ^4 e
were subsequently repriced and placed. In the fall, there will be more deals.- H) w# |8 L0 N! Y% i. D7 X9 K+ Z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ o" g$ O+ v- m, Z
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
/ m. Q2 L' j% M) B2 igoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
3 y/ Y0 q8 m$ ^bankruptcy, they already have debt financing in place.* U- f' A0 r6 T0 J( q* `- q8 X
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
. t" i u6 ]. s, W9 W' G8 l* M4 jtoday.6 |1 l% E, H# T5 p
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in; q$ w% a% O8 E! T
emerging markets have no problem with funding. |
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