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发表于 2011-9-17 13:16
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Current situation
+ C" \/ }' b; h. s/ P/ p The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
! E5 s# f: U; J( T1 q8 H3 \; Pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may" t1 [0 a9 ~3 f4 c2 [
impose liquidation values.
' M9 _8 B' ^8 \2 c+ w- i2 u9 c In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) ]2 K( O! |& K. \ [$ q l: nAugust, we said a credit shutdown was unlikely – we continue to hold that view.* V; a$ N0 s1 [5 |% Y' b* n
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension: ~! B6 {9 _; z' }8 m0 M0 o- U
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets., g: Z h5 j6 o2 [# N
8 [: Z: H5 `1 R7 S$ \, e) h6 U4 j
A look at credit markets0 ?0 v! M; o) M/ ~
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& U H- d" Z* g7 ]4 oSeptember. Non-financial investment grade is the new safe haven.
" ?5 n' b* b5 ]: D; L% n2 S+ _. @ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
) ~5 `. A# A+ f7 M' wthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
/ b& D2 M5 z ]2 `# m% E( K, N* Dbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
/ L4 G6 z+ I2 S9 iaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; m2 `0 E( t: W: NCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
3 H* A K5 `/ n+ K. ]+ @9 _3 Apositive for the year-do-date, including high yield.* M" P+ k9 F" A( K/ }3 F
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
^3 q; J9 X7 G2 q( G; g6 i- ifinding financing.# Z; }* K, ^0 y
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& x8 W: U L% ]6 W4 Qwere subsequently repriced and placed. In the fall, there will be more deals." a! w( o* O! H% J- H& h1 ^
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and9 z- \6 S. |7 E$ h+ W* W7 x4 w1 D
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were! z; X3 A* q& h
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
: V8 z# q1 ?9 p. rbankruptcy, they already have debt financing in place., ]0 g9 N2 _( C; o g; y
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain, c q- M2 G' L1 ^% I
today.
7 a l5 d% \" X0 ]% D2 B Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& B9 x6 d; b" Vemerging markets have no problem with funding. |
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