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发表于 2011-9-17 13:16
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Current situation
: ]- L$ |9 N0 u* X The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, q+ v2 z, ~+ f1 _- Q4 a
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 |6 X( O: v& |2 C6 R) x1 O) e
impose liquidation values.
# N6 I- Q2 _" }- q In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
$ `+ b( l: S; f* PAugust, we said a credit shutdown was unlikely – we continue to hold that view.- `! Z" ?3 q* W( v5 j- T
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. Q7 _( }5 B2 q2 X8 O8 oscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets: P2 q4 l6 }; n
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
, k; ~4 f# H+ QSeptember. Non-financial investment grade is the new safe haven.
& j! e9 W+ E0 Y5 F5 }$ @9 C) e High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
2 z" O# ~$ ^: y+ I: b: a! tthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1# a% |$ u7 y6 L% I
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
" h D/ \8 ?/ T# x& J+ _* raccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade/ i# U5 D% U- F
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 D; K, w! H: u7 U" r2 {positive for the year-do-date, including high yield.
+ x' m3 O' ?$ S1 k( G' h: ~ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble0 ^+ F1 }* \8 T4 M
finding financing.
$ j& G' ?: `0 j Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
3 m7 H, e3 i4 W. H) g7 _were subsequently repriced and placed. In the fall, there will be more deals.1 s$ c! p% I7 f8 g: U
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# m: s& G% L0 q# l, d: k l
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were3 |$ S" `9 U! x* h* {: k& V4 e' V
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 C# N6 g) D5 H0 m2 S$ k" R3 w9 p
bankruptcy, they already have debt financing in place.: H; g4 z2 b; S% Z: Z
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain0 S8 H+ g6 l) W2 {
today.
! q3 f) t" p7 g ^6 M$ { Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
! q$ |( }+ A: S( N8 j6 Z6 Pemerging markets have no problem with funding. |
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