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发表于 2011-9-17 13:16
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Current situation
+ x& L1 r" Y C+ H3 v3 a! O: | The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long* ?' ]2 I) Z# o4 V+ a3 {# L
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may7 J) _! B# J" k H) X7 ?/ u
impose liquidation values.
: T8 Z1 }" V/ ?% c! h+ v In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In2 J0 M" d5 N; _8 D
August, we said a credit shutdown was unlikely – we continue to hold that view.
1 C8 \+ o' E8 G3 L' B% `( { The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension( o% K* u! r: X5 ^! F
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.3 j0 \+ c$ \& o& {% @+ W" H- N
& `! N/ `) T: ~1 M; f. LA look at credit markets
. {8 h, x/ w! D/ P. v) ?1 @1 P. o Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 h1 _6 K2 f/ [# e. c
September. Non-financial investment grade is the new safe haven.( v2 E9 i7 P3 R+ W7 `
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%" {6 C* ^* Q' G5 l5 Q( |
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1+ h, B! r" M$ i
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have& T. o- p& E4 p! L! P
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
1 {6 ?& |1 m8 o( B! d: iCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are5 }. g4 a/ B3 ^ F: O
positive for the year-do-date, including high yield.
! a$ o! u* N; ?: ~: G Mortgages – There is no funding for new construction, but existing quality properties are having no trouble& j& F1 R9 I( S: f& b
finding financing.
/ V& |0 z! N8 @8 t4 r. ? Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 s7 o# ^" b$ B" C _: R7 Y+ H$ h5 c
were subsequently repriced and placed. In the fall, there will be more deals.0 s. @6 c2 a$ N) Z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and* J" z' a g, H; K u. L
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
1 F9 C/ ], z+ T- Ggoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
: S# K8 H% e0 m" pbankruptcy, they already have debt financing in place.
0 O7 ]" W. ~3 a2 s( a4 B+ [. c European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
/ ]. }! V, y. |; L% {& o0 R Vtoday.
" s: H) D$ I: a T8 _$ `8 d$ T; Q9 T Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
+ a6 a$ {/ b; t: p* S4 pemerging markets have no problem with funding. |
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