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发表于 2011-9-17 13:16
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Current situation
# K* w f+ I6 L! d The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 g3 o" {( b& G" {5 yas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
- H5 a* l2 z) A5 ?: N7 Q+ }+ q; Zimpose liquidation values.; k4 ~; @. Y: G R
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
$ u4 F2 D$ E4 V3 M( w4 iAugust, we said a credit shutdown was unlikely – we continue to hold that view.
: u9 j7 w, a& g. }1 C7 Y* l The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. {" b, X# K. C# H- i0 o9 cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* k0 y8 @+ ]2 k7 a
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A look at credit markets$ D) N+ A g) ~! q& Y1 F2 o) u7 }
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in; I4 z; _7 E ^7 n
September. Non-financial investment grade is the new safe haven.: ~6 M8 {& L6 n& ^9 t8 C
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
7 l' j. X. o3 E5 v2 e& `then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
- F. s3 J, M g) `0 J4 ]! X2 vbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- b* ^* b& J H# i1 J, K
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
0 H T9 b, A( DCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
/ u/ r) U! q7 }: s! R" w- Npositive for the year-do-date, including high yield.* G0 P. _' B* p6 o' {5 L
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
; x* ?: k+ @% [! D5 cfinding financing.' r- C k) G" ~; f
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
4 v3 P) w0 q5 ]3 @+ [0 s3 B+ owere subsequently repriced and placed. In the fall, there will be more deals.1 d+ N& C _" @
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
3 h: @9 q9 d+ N: ^is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ D3 j; U. z! W% v8 ngoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
. n3 S5 o, D; h) B+ S% F, \bankruptcy, they already have debt financing in place. X! }2 C: r- r: g
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
* w+ f" }2 h' I. z, M7 Gtoday.( o4 Q6 |5 _8 e) s( z& h* A* G$ ^
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in4 C) _: g5 O$ |
emerging markets have no problem with funding. |
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