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发表于 2011-9-17 13:16
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Current situation
, d/ a3 \' g5 @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
7 ~+ J; h2 ]# |5 mas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
0 _1 d4 W0 F3 R! eimpose liquidation values.5 C7 c% Z! G2 E# c& o
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
& T+ O/ n# x2 N% U; ]August, we said a credit shutdown was unlikely – we continue to hold that view.+ {# N) ?* p5 q
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 Y, b$ S1 |1 ?' ~+ T* H* w! k
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* o1 b+ p# }1 s1 G8 ~/ i6 z
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A look at credit markets( J- C; E2 S1 i) }% H. p! H' I [
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in& `- F; A8 C/ S/ Y& ]
September. Non-financial investment grade is the new safe haven.9 H* V" W8 r# u6 A4 u" e4 F
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%. u; G, r; o- l K% V5 Z) Z
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
6 R9 V6 T! A3 Z W& ibillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 I0 d, |4 q* f p8 f5 J7 Maccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
& ]4 w3 B6 o3 m4 ^CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
5 V6 i' ]$ Z9 Q) }positive for the year-do-date, including high yield.: W- V K- o1 X8 d
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ C: \+ c. S( z# G
finding financing.. D7 u e' a6 G" \& {8 U
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
( o& c: a! y+ d. Y; d+ r/ Fwere subsequently repriced and placed. In the fall, there will be more deals.! Q# W/ A! v- c( Z1 S# }# ?
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and/ A( q# i) S% D& r2 G$ K
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were* U) \% z- k5 J! {
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 u" B% z- u6 I3 P. j: z
bankruptcy, they already have debt financing in place.' Y9 A& Z/ g; ?/ o$ F8 \. f
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
( ^8 o) x9 v- ^: Q X' G9 vtoday.( O+ Q+ [& o6 j# M' B! v
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
4 P$ y& W/ m2 o5 Q4 W/ p4 Iemerging markets have no problem with funding. |
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