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发表于 2011-9-17 13:16
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Current situation
1 r( |5 }$ i- U* B& g" L5 f! } The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long2 n l1 l1 n% t$ g
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! {' |1 J: r/ V# ^4 |7 Cimpose liquidation values.
# e" G4 s$ E% \ }5 K# X! u In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
5 `4 @* d& J w) C6 @9 L1 _August, we said a credit shutdown was unlikely – we continue to hold that view.) i! j" A- ]8 ?( {8 O) ]
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
( t {! Y7 f3 J" c5 Pscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( Z- t V6 v% b& A4 Y( A
+ Q$ b7 i- x2 O% a, A' v. wA look at credit markets
! ^7 T! V6 Z$ ~% P# N: Q$ o Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
' o: }7 {3 l% zSeptember. Non-financial investment grade is the new safe haven.+ q/ y% ?1 I1 S& y1 s5 L E' T0 @: K! S
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%; @% W# K/ J- x1 P; K- m" w& h' z
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
' S6 c$ Y: d; ]9 Lbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
F, j Q. G/ M% G3 A) J6 faccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade- k0 x. t- n1 ^" F& T
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
, q: z/ E& Q" r9 Hpositive for the year-do-date, including high yield.9 F, I3 B- {& g, S8 g$ v
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ j- D, a+ d; A, @finding financing.
0 H" Z/ A" a: c7 t' V2 O Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
2 I) D* a1 o9 b: z5 H! Qwere subsequently repriced and placed. In the fall, there will be more deals.
2 {5 [* ]0 D' l/ D4 c+ U Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and$ r* @4 m! c* P
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were, `6 b% N0 o8 k% \6 {
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
; ^% _4 j' u, \& ?$ v! Nbankruptcy, they already have debt financing in place.. n. O6 M& B# Z9 I, |" I9 M
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
; U6 C7 G0 P& p% N2 K% C9 ~" Btoday.8 B8 t' O) \) F% x: e E& J# K
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
m2 }6 x# l% Remerging markets have no problem with funding. |
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