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发表于 2011-9-17 13:16
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Current situation5 d4 D2 ]/ u7 T( j9 u. z' E+ M
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 C, m6 a4 k$ b. k; H( i8 Q1 G& r- p
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may z" s/ D V3 {0 `1 Q
impose liquidation values.
0 u/ @% Z8 [0 p8 o$ T In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 o2 f# z- f4 v0 O5 F1 @7 W( Y! Y* {
August, we said a credit shutdown was unlikely – we continue to hold that view.2 F/ V, [* O4 P( t
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 ^6 I, Z% _* K; T1 r, q; \scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
2 K4 X& H1 r' S. C- I' O9 E" Q Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& k2 C6 L3 T6 wSeptember. Non-financial investment grade is the new safe haven.
3 N& D3 P0 @6 a9 c" b" a$ J High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%) @9 R: S3 h! a. X8 s, T
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 o/ T3 q: m( m5 e- B; r# @& Y
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
7 c# Q6 _0 X7 Q7 s# ?access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade. W& ~) a4 A/ l+ ?; R( p6 j1 S5 r
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
" y, H: F" r, i' Wpositive for the year-do-date, including high yield., Z$ B8 c. f( M: F3 `5 j, E
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble3 c( R0 l" f6 A; |, [- L3 B5 g
finding financing.
2 O; m/ M( E) L- c& [# m Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they! n! H2 P" m# W+ t( V3 v& \4 R3 V
were subsequently repriced and placed. In the fall, there will be more deals.! j h- ^4 c# H; i! M: Q
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and: Y$ p$ Q, V- ?" S' b7 {) Z
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 U. Y7 x% R. [4 \. ~ _going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 E' e* y2 [3 X% D" |( H1 t% ?
bankruptcy, they already have debt financing in place.% ?- O1 {' d5 i+ [5 ]
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
3 N8 _: D' |" Z# P. Z7 {; Mtoday.
' D1 R. T# K8 J) H5 R( Z Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
8 J8 [/ t5 o) {0 \, y8 G. ]$ eemerging markets have no problem with funding. |
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