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发表于 2011-9-17 13:16
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Current situation# v% H0 m. k0 |3 U! N3 |+ a: L
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 ]0 p( V8 V& ~
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
) f) s$ T& G) x4 N! Fimpose liquidation values.
+ M- K9 |+ y) }% F! \% l In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 v( q s, d% J" m6 v3 Z1 g& u
August, we said a credit shutdown was unlikely – we continue to hold that view.* N; V: y5 x" ~( W+ a3 ?
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
$ P: R' C) Z! H2 ~5 c$ _4 oscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.' C5 v' N1 D; p( j( j1 ^
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A look at credit markets: C; i) Z, k3 c. Y ^
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in/ {" P. ^. ?; V1 H+ o
September. Non-financial investment grade is the new safe haven.
6 Z6 o4 Z3 P9 q l High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%- Q5 i4 D. G! j" F' ?4 ?7 F" L: d6 E
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: }5 Y( ]0 J/ p0 r, U0 k
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have" \8 r% i" g# A
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade( B7 O( w6 U# t Z5 ^
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: q; c z) a2 Y
positive for the year-do-date, including high yield.
6 E& x% o [" ^" q/ Z Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
; m) m' j( P, N/ E1 s! d# m# n7 C2 ?! Cfinding financing.
* L& s% T5 b. E" g8 A9 r2 X; S Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
& |9 T* J* a5 T6 `* h9 M* j5 Rwere subsequently repriced and placed. In the fall, there will be more deals.
. G( c# m& }; R# ]) z0 z9 R Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! B& \9 J2 P4 i) I/ ?0 o
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were/ W+ S3 Y. G% m+ M
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 ^" w3 w* X% `2 v6 F# B$ i' N" k
bankruptcy, they already have debt financing in place.( _# J8 ~7 C1 u. H2 `; V V
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ W- g: f/ p7 |* r* e2 w8 U, }
today.* S' r; U) C' w% ?! `+ }
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' ^- h# v, I* {% D0 L$ k, I5 Temerging markets have no problem with funding. |
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