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发表于 2011-9-17 13:16
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Current situation
! I3 y2 l/ O# A) J The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 P; j- ]9 q+ d, q# h4 R# E* U
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
9 i: G( i! Y/ ?0 D4 T/ c: K! `" limpose liquidation values.' C) E8 \1 I( u# W2 o; \
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In% G& h3 a6 `* y( \: ~
August, we said a credit shutdown was unlikely – we continue to hold that view.
/ E: d" c/ R& f( } The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
( A9 J: d+ |# _/ S7 ?2 z. Xscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.4 P: J. d+ V& ]- k: u% u
! j6 m7 V [% l6 lA look at credit markets
% l+ K% m7 `% k1 o; I, D9 g; i Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# @% Y) {" p( }: l pSeptember. Non-financial investment grade is the new safe haven.! d5 O2 y% C7 _9 r1 f0 a& _7 N; O
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%) T' j( L3 W- k! E# w) G, i6 o
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 U8 o* e! r6 j' I4 A% dbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
% b# R3 t* D. J0 T! r5 Zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade1 o1 l% G+ M* |( s
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
! k6 x4 u6 a3 C+ {, m Gpositive for the year-do-date, including high yield.3 G9 U1 ]) s( z
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( {0 |: n) F% z4 e* w9 {/ V& H8 Gfinding financing., ~2 j1 V4 F* @7 u0 E
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
5 k: ]5 X$ B; u1 c; [" `2 S* {were subsequently repriced and placed. In the fall, there will be more deals.) `6 |. v0 e# s, z W
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
b+ b! d2 C [0 Sis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were- |, ]6 r; G- t& L" n- `/ K
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for3 l5 I" J8 Z* x e ~
bankruptcy, they already have debt financing in place.
2 T, j! o |+ g1 |2 C/ S' H$ b European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
4 m2 r9 r! ~! P) j0 Ytoday., x% g( @" J e1 v3 }7 R$ G
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in5 q" b# b' c1 F: m- R* _
emerging markets have no problem with funding. |
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