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发表于 2011-9-17 13:16
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Current situation, f/ V N3 U2 y) w, D- l" z
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 D% m% G! f9 b
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may# C L3 X ?8 ?( A
impose liquidation values.$ s r7 m5 q) J) }, Q, y
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In( F" ?: `. m: m
August, we said a credit shutdown was unlikely – we continue to hold that view.4 u2 `( z" }$ w# q# |6 T- b0 e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 g5 e/ ^: Q1 r8 Z) |9 |) q bscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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) }) T5 {1 w; J6 |; y3 CA look at credit markets
3 {# ?( }+ p5 m- B4 u1 E& m Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in# |& \8 M5 m: a5 e) c
September. Non-financial investment grade is the new safe haven.
3 \8 C3 s: b* G High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%% I9 G8 T1 i& T' C, E5 `
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 E$ U- _8 ]9 ^% @& d" ~8 Lbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, o/ F/ H& H7 }# T, C. p9 r& eaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade& E" }: |# a8 u! n. e1 P: h- o
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. d4 Y7 N; W! o7 D
positive for the year-do-date, including high yield.
: _! g3 S- l/ t. ]7 J2 ? Mortgages – There is no funding for new construction, but existing quality properties are having no trouble/ n& d4 _& K( |# g
finding financing.5 V0 m5 V! {9 Y, h
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. ` v* r# N9 D& U: M4 q0 |$ Gwere subsequently repriced and placed. In the fall, there will be more deals.7 E- X$ j8 [! M" y+ i
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and5 L8 L5 {7 ~4 ]: k. B2 a/ F
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 H1 f% F w, O) u3 y/ t Xgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& ?4 g# m3 H* |3 p8 }2 n6 w
bankruptcy, they already have debt financing in place.
: R8 x2 A( l! I9 H9 e European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain4 C1 B, y9 T- z# u; {
today.
" f: T: v. I1 J Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in6 @0 {/ F8 G5 N- y. L I
emerging markets have no problem with funding. |
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