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发表于 2011-9-17 13:16
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Current situation0 O9 B# m! G2 D8 x! f% U
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 G9 V E7 r' ]
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 g# V2 G- ~" x! V$ [' g
impose liquidation values.. Y. ~% `0 [* u z! }( O
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In- S$ Z- q/ ^& x8 ^' a* d. {
August, we said a credit shutdown was unlikely – we continue to hold that view.
# p! E, _( O' Y- ~7 @ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
2 d% c# j! ]3 q4 c8 f: |scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.0 G1 j/ C2 X# g( ~3 B3 p
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A look at credit markets
1 c, o7 D$ a. F% b* l4 j, Y Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in$ {; ^- W3 |6 o. x0 [3 V5 @
September. Non-financial investment grade is the new safe haven." w3 H/ E# e* ~3 ^' C* N; [; [
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
) D* @9 Q4 Z% J1 S" ithen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
/ e% r1 \% W4 M; K! @, X! t' ?! Q( Wbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have3 B* U1 O7 W X1 G v
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade' Z% H! w! D: g2 T5 [
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are t$ q9 f8 H4 p) ^$ o$ [
positive for the year-do-date, including high yield.
% a9 J f7 K3 c- o& A" m Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
3 P/ v; Q7 x1 B1 s. n4 Zfinding financing.1 i9 b& r% T# m5 i) O7 g
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
, k6 o! _# t& ?% |were subsequently repriced and placed. In the fall, there will be more deals.
# z7 {7 Y+ I6 D ^5 v: L1 V Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
8 Q& h; v0 D! His now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
+ G( [" U$ ^1 o; S/ {$ Tgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 Y' @8 J, O, d8 k+ N2 d; ^8 c
bankruptcy, they already have debt financing in place.3 }/ ^% `+ E, M, I6 r' `
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain9 Y: U- f. Z/ j
today.
. H0 ^! H3 x) ~- J, z* y! \ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" f5 t( U9 h" ]0 K
emerging markets have no problem with funding. |
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