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发表于 2011-9-17 13:16
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Current situation
' i+ ^4 d4 p, B" \5 Z+ i5 w The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! ~; q1 G4 U7 c! ]4 {+ r6 n
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may3 Y6 L' h2 p' C" C: L
impose liquidation values.. O0 m) b& a: Z' y. A4 |/ f; }
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
, X, }1 a4 c0 r- M+ ]- hAugust, we said a credit shutdown was unlikely – we continue to hold that view.. z) C, h1 U% }8 }: G
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
2 a$ U$ e: j$ I6 \9 R5 Cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
0 ]1 ~+ z6 [7 S; I( k& W: |3 i Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in' A/ l* e8 ?' C. {
September. Non-financial investment grade is the new safe haven.5 l' E0 y9 A* A# i5 C, S! J6 S
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
4 P: J, ]8 V- w1 I- A0 cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
9 I9 S* J" [" G+ L& z) Vbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 |: q X F+ ]* _8 I9 _' j
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- X5 u& ^' f, }+ ~; gCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
2 C2 N) P. x3 C& `& ?3 Mpositive for the year-do-date, including high yield.& K9 s5 [0 d; D3 f1 s% Q' x; P
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
O+ S; h! T! qfinding financing.
* i! R G, _9 D+ Z+ |2 [( B Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
\* b! `8 W! ^5 Ywere subsequently repriced and placed. In the fall, there will be more deals.$ p, V9 D3 a* S K+ g
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and% u9 U2 r) b8 T5 ^# V, {) {
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were" U& K9 a% d, O/ C4 ^' j
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for4 z& A }* u5 f' p2 @
bankruptcy, they already have debt financing in place.
. i" B2 d' j! m European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain! m- k$ o0 e# J% F3 L P% [6 e0 \
today.- ]/ @- j! N6 t, H
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in% z" w! ]* G, F8 @4 d8 P
emerging markets have no problem with funding. |
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