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发表于 2011-9-17 13:16
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Current situation
+ S% x( E- x' C9 X; D& D7 @ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, {" B+ k L7 _- U
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, x8 H5 w6 F9 uimpose liquidation values.
% n( o* P1 m+ ]& D: a In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
`; h6 v' q6 Y7 h% PAugust, we said a credit shutdown was unlikely – we continue to hold that view.# i7 x- `0 b0 ~* P
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 }: d0 X# E0 R7 [- Y, z. d
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.7 J( @1 r* [* Q! f) A K5 m' J' h
) J2 Q+ U6 J: N% p; i+ m/ LA look at credit markets
: p4 |( W% C |) |; m! d+ ^ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
4 \; N! d" W4 Y8 A4 }September. Non-financial investment grade is the new safe haven.
) @) W# v- B! O) Q$ J' ~$ R5 ~ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%: ~' r4 e" u( `, N8 T8 y
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $16 D! F2 G( h+ t5 \
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
1 F4 r6 a- t1 _6 r# Q# x9 Naccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade/ s, h1 g" F7 V6 u
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
, r, l% B; y0 }6 [! ^positive for the year-do-date, including high yield." k& B3 B9 c: r9 G0 t" a- W
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble% \' U' H) R; x4 ^+ b, w9 F% h) I
finding financing.
$ C+ L. o! L* E F6 K Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
' T6 z# U7 R2 N4 R* Xwere subsequently repriced and placed. In the fall, there will be more deals.0 Y* H( m0 E* V4 o
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# M5 ]' a' c( W! U* O5 Z4 a( z0 ~
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ x( G% v- ?# a9 i& U* c: H- hgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for% m4 \$ v. y4 {8 A& _" H
bankruptcy, they already have debt financing in place.
1 W7 X& [, `3 E) j# |% l- d European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain7 w+ L3 @8 w }) J2 |. r O7 R5 n
today.
+ }& H/ A4 ]& D, i% ^6 S" D1 a Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 }+ _" r P, L& [8 b6 J remerging markets have no problem with funding. |
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