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发表于 2011-9-17 13:16
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Current situation9 m# k0 o% L" R; ~
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long" Q; {. E# ^# g. R
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# z. _! s- E2 @, e5 ~impose liquidation values.
) N- x9 M; _4 H0 j In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
: ~! `3 @% t: ]3 m! h/ ~+ RAugust, we said a credit shutdown was unlikely – we continue to hold that view.$ u! |3 Z4 s% e5 k: W" e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 m5 K7 N9 A- Z0 H! F
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! ~+ x+ _" r# G0 l" v H! |
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A look at credit markets
6 s/ U' _0 ~- C3 [& W% ~ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 u2 ^& s/ Q7 QSeptember. Non-financial investment grade is the new safe haven.
6 m& p/ m, a3 i High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 a0 r8 A, |7 {; m. ^. B1 H: v
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1- o+ E* [( ~; ^( e+ j$ n+ s
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* n/ m5 R# R; Xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade- R5 D: Y+ n+ w# x! M) \
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are: k- T7 \! [# ]9 u5 I4 U
positive for the year-do-date, including high yield.
- g J/ K% _( ?0 d+ N7 A Mortgages – There is no funding for new construction, but existing quality properties are having no trouble8 ?' e8 a: [$ @" ~: X
finding financing.
/ _8 q# E, e3 L. x6 b& v% g Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
2 t. x; L( ~1 Z9 W1 Kwere subsequently repriced and placed. In the fall, there will be more deals.
5 { P! N6 B# Y) N* z) t% s' z N Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
: T+ f& F3 v% L9 Xis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were& t! _7 F7 A- e- C, R
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
- T( E3 |3 c. j4 s+ O# A( o# M2 zbankruptcy, they already have debt financing in place.
% Q( m" k$ O# R9 X; [: x European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ e: o& i& M9 d( A9 P
today.
0 q$ O8 u5 Z5 y: ]6 |/ F Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in9 d7 |2 L1 q) X& V7 j
emerging markets have no problem with funding. |
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