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发表于 2011-9-17 13:16
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Current situation
; u$ n6 Q6 F5 W! \) R5 k The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
% s* a2 J8 U7 U3 Y' q' @as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may0 ^; s1 c0 n5 U3 A8 }0 s
impose liquidation values.& \. \0 a; ]4 h$ ?
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In8 X4 c8 U. J- k
August, we said a credit shutdown was unlikely – we continue to hold that view.
+ {4 m/ ^& H4 m$ M* D. h' [ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 n+ n: X2 F0 ]- N; r! \
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.( Q5 h. q* s1 R
( d2 z6 |# S# q- _A look at credit markets9 i3 L; U+ `' s' [$ z: a+ O* n% F
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: q7 K8 ]! e9 k8 m& Z1 W; nSeptember. Non-financial investment grade is the new safe haven.
. e' O( P9 E, {: f0 R3 @* o W High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%0 W! Y1 a7 c/ z. f H" g. O
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
, M7 k. [ v9 {- y/ Y3 ebillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have# J6 o8 b& `4 J) a* {4 c
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade h% ]0 } E; Z& P6 I2 g9 k
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
* b8 l% s. z8 p1 x5 lpositive for the year-do-date, including high yield.
6 o* G. l5 O' G8 ~+ m Mortgages – There is no funding for new construction, but existing quality properties are having no trouble. p6 [; I7 i, D( S5 \6 x' L8 R
finding financing.% n. b; I. N5 J! @, |$ P) ~
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they/ E& J5 V2 F/ ?% F
were subsequently repriced and placed. In the fall, there will be more deals.1 _; }1 Z! ~1 s8 c/ Z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and, r6 }5 T$ j& [
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were. e: a' |3 `0 X% O2 @! u, T
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for3 p% `0 X2 y3 k6 \- x! P* Q
bankruptcy, they already have debt financing in place.
$ r9 X2 G! e$ q) e) R$ }7 ? European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ |4 K# P7 B1 \ l$ B
today.: G' [6 z4 M+ f1 T4 k/ u
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' C: N, K! P, X7 O' l' K# @: `# t7 Kemerging markets have no problem with funding. |
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