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发表于 2011-9-17 13:16
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Current situation
9 q+ E& s& S ^/ T% [$ C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long( y. T6 s+ H1 Q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. I8 g, V T0 k
impose liquidation values.
. h3 a3 A0 o! w. l! k3 I* d In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In4 Q) x, _# G2 c
August, we said a credit shutdown was unlikely – we continue to hold that view.
: k; t- r2 G3 M1 E& F# B5 _- `( l The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension1 ?7 C7 M! W4 j4 P: K1 U
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.& u5 ?. I- { U i6 W
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A look at credit markets2 a# \$ i% s" L( O) V1 C. M
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& E4 R- o! I2 c. y- g+ R8 @7 |September. Non-financial investment grade is the new safe haven.
, D0 K v' X( o6 E High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%* u) f2 @$ R: [9 Y1 H* \: U- z
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $19 O- I! w' _4 ~1 h9 V. G" F. D
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
6 a9 g' Q: ]* H1 W$ Daccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
$ s" A/ a7 W3 n4 `! bCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 x' O- U: N4 ?9 s4 f9 Opositive for the year-do-date, including high yield.
( j' b; H" r" u4 W! E: w2 d Mortgages – There is no funding for new construction, but existing quality properties are having no trouble( \# G/ U5 r/ v1 i% ^5 n
finding financing.- H6 j, I. `+ R
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
% s! F4 q3 |( v/ P. A7 Rwere subsequently repriced and placed. In the fall, there will be more deals.
9 H6 B: J6 |) \* p Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and" ]$ d: i+ P' l" s
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
' j7 c5 L9 Z# T/ d- n9 dgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 Y& U8 T* S. x; V
bankruptcy, they already have debt financing in place., }8 k0 g# n5 J" t$ A4 @2 O" P7 o
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain; K# {* o! D3 B! M& R% e6 C
today.# u. j; M! k6 W# i& p3 Z' M
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
( |5 k. t' _2 y& q+ U( L# I" Wemerging markets have no problem with funding. |
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