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发表于 2011-9-17 13:16
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Current situation! q0 M T; }* X7 N- \- @
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
8 c# `. m, I: ?# K* fas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! m" o# O% [4 Iimpose liquidation values.
! G( ?/ K/ {, J7 i6 F In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
7 I- p4 e- S4 X" r# x2 EAugust, we said a credit shutdown was unlikely – we continue to hold that view.
% Y5 v1 |! u, |2 L0 Z8 X The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' ~# R6 I* u7 l8 k9 w8 }
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.- B# Z$ ?; d( z5 W9 `, c( t
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A look at credit markets
$ U8 y/ A& P: j Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
8 Y3 ]: S! s5 M( |7 k# FSeptember. Non-financial investment grade is the new safe haven.; o+ b0 d& W, k& ^; n- l' j
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
9 r0 j* B! l# A; C5 \$ |then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
: j9 G6 y) F: y) c! Y( L) q( G5 ibillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
i1 T4 [) C/ h2 ]' B1 [0 b/ I. Waccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# y5 R/ t% e3 d x, z' n9 C. j
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are7 h# ?$ ?1 a8 O) A/ e. A# F: \1 K
positive for the year-do-date, including high yield.
' k) ]) f- e2 \% V Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; A9 S. R' [. z' U
finding financing.
4 O7 f1 a# C3 l: v Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
# }; W1 ~! M* Ywere subsequently repriced and placed. In the fall, there will be more deals.
+ p; S+ X5 f* B, T) {; U Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
0 f1 ]# A9 j6 `. His now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 s0 S l# L* @8 q4 |4 d% Tgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for* J: {: ~& u2 }0 t4 [
bankruptcy, they already have debt financing in place.
8 @3 L& T( w0 O European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain: G7 p5 q% W& V
today.
" C& U0 ~' A0 N Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in3 h4 n* O, {. y9 D7 ^: E
emerging markets have no problem with funding. |
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