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发表于 2011-9-17 13:16
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Current situation
: @3 a: W0 R: ?6 ~! T9 }# w4 Q3 E The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long2 K6 ?' c# O& _8 p7 K) _" U L
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! V5 \+ p/ S4 H2 s# Cimpose liquidation values.
$ e+ ^' S1 c! y* Q d8 K: M In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In& Q/ i" v) J' Y$ E9 ^5 c
August, we said a credit shutdown was unlikely – we continue to hold that view.
5 B" |. x9 p6 X The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension y( L* A9 a, r) J- u
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets& j# p/ k9 c0 W) Q. n3 Y
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in: ]" ~1 F* e" ]/ c; B
September. Non-financial investment grade is the new safe haven.* p* E! N, r0 ?. a) T3 t5 r
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
# V, }0 r6 l: Qthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1! J3 b* P, Y3 O& z/ t
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have; X: H+ L1 Y- B3 R' s
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade% ?# }4 ~) i- y) n
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
) @8 V6 Z, ^3 Q/ s- j9 Z0 }) Wpositive for the year-do-date, including high yield., [$ F1 R8 c( f8 _( t z2 T
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
6 C) \. j; C: d, y1 U/ @1 nfinding financing.
k3 {5 o) D* D3 @0 `; N; o Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
3 Z o/ i0 k$ f( swere subsequently repriced and placed. In the fall, there will be more deals. d/ B! [: g" t( i1 [2 v- A2 v
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ r0 }- d0 _( Q% X
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
: y/ W" G% s" F' F7 ngoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 f) r" |$ V2 K. U. I( [5 \
bankruptcy, they already have debt financing in place.8 n. J+ W5 r8 H/ m/ Z$ t- w1 }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
& ?5 h' W, ?" W9 F6 {' Ktoday." K) K: F I: Y" a' |
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in7 Y$ v& H* c( ^: f) p
emerging markets have no problem with funding. |
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