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发表于 2011-9-17 13:16
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Current situation
+ s7 E. X) t& z; y The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
+ r" M f1 {' X7 w: N* @& cas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may& P4 R8 V, h# p0 s* J+ H( y* D( y
impose liquidation values.
V9 X9 c* p9 [1 B- f, k' P In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
9 E) q+ T" v$ ]8 [0 A2 K) s3 RAugust, we said a credit shutdown was unlikely – we continue to hold that view.
5 |' Z& \7 T* v& Q4 l5 @4 {4 n2 ] The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 ?2 Z) x4 ?" X, e
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.9 n/ u5 w6 I: d" Z% E7 y8 W
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A look at credit markets# S$ a3 l) C1 n/ n; m
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 O7 L. M! w. LSeptember. Non-financial investment grade is the new safe haven.# }) @2 }0 S' }5 B( t
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%3 _" l* c0 g1 b! ]
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
: c) \: V8 h1 X" C/ v* u' Dbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
, j; x; w& Q( {0 l! jaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
4 L, f4 l6 O! TCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are3 A) M9 o F& q+ f
positive for the year-do-date, including high yield. t3 q! |4 `& e' J& {) ^
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
8 ~ A _) s+ E7 Nfinding financing.
; E N3 l( m3 c5 z* u$ t4 S Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they, Z; b8 \& ], R: D4 b5 O+ D
were subsequently repriced and placed. In the fall, there will be more deals.
$ y- R+ Q5 i2 Y5 {# a+ F! Y Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
6 Y0 N X1 v0 D& s8 His now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
6 A: p2 K, E7 K. e- r" S0 s$ P6 cgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for, i* T' D9 ^% A5 P# @" ?
bankruptcy, they already have debt financing in place.
) p" n0 H8 @. J7 S European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain( O6 z+ J1 j" R! O
today.# J1 {* p; R2 D6 ^# ?, V" D
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in. p# Z. D' G2 R* u- q
emerging markets have no problem with funding. |
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