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发表于 2011-9-17 13:16
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Current situation* A; j* O- m- k9 g
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
! w& w* ]2 s& a% j* Has funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* n) n4 ^, R5 ?. y
impose liquidation values.
# W7 ~: p* P. ?0 G. v In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
. X& S" O/ Q6 {. vAugust, we said a credit shutdown was unlikely – we continue to hold that view.
' w) ]8 ]; k- G+ C The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension( E6 d: M1 G8 E. ?5 G' \* p
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets0 h* S; M, N4 `1 T
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in" P3 k- H$ W& q- m" R, m. i9 O
September. Non-financial investment grade is the new safe haven.
7 ~3 G5 G1 E9 j6 ~2 p High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
, \+ j$ p' A! Ythen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $18 Q9 w2 K& d1 U" w9 K) z/ S
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have" N1 S" r/ G3 [/ t, C
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
2 p0 U+ D+ r" S, o! wCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 t4 ^! T) |3 I; Y9 {
positive for the year-do-date, including high yield.
% d7 ?9 b X, a& y Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
% d. ^" i$ z: Yfinding financing.% x2 [, g* h9 d. H9 F
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
) U0 j1 h& h+ w3 fwere subsequently repriced and placed. In the fall, there will be more deals.+ {3 G' c7 M$ x/ S
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and9 Z9 I' O8 E, C5 Z& D% x
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were9 l" y' Q+ \5 c( S: N. S5 R
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" k$ [& q& e. l1 j) i6 e% H3 T
bankruptcy, they already have debt financing in place.7 R* z# F+ P; i& l+ }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
" u. I# o* l- y+ Q) Temerging markets have no problem with funding. |
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