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发表于 2011-9-17 13:16
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Current situation
% a& A& S2 P( e1 T2 O The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, F2 F3 N# @! j& y
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* ^) w" G8 _' w% _: ~
impose liquidation values.0 V* A$ v1 |, A/ V) e( z
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In/ ]. ?- h( m$ z$ L
August, we said a credit shutdown was unlikely – we continue to hold that view.( h: |+ M/ f K
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
* R7 ?4 Q- I% i* {5 P! rscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.) Z) k) e4 e3 B+ S; C
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A look at credit markets
, o" w- d8 `0 j9 z' r3 a5 |2 n. g0 R0 ` Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
6 g ?2 Y+ A1 o: rSeptember. Non-financial investment grade is the new safe haven./ U& d; a+ _1 A- z: |
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
, d1 z& ^ O6 ?) D, h" nthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1( X- p2 \. p" V$ b0 d7 N2 U
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- F: J: {. F$ I) F2 D& w. f! Q
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade: m6 ^( g9 ^6 f
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are3 b9 O+ y- h/ c6 w1 B
positive for the year-do-date, including high yield.
+ O' @( W! k; C) n3 U Mortgages – There is no funding for new construction, but existing quality properties are having no trouble5 ^* \" s/ b& `% |) j
finding financing., D1 } D* y7 X& ]5 ]' d
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 V9 l' f9 K1 k
were subsequently repriced and placed. In the fall, there will be more deals.1 b% G/ [2 G0 H
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& Q$ c- y. Z3 C2 A) m( s9 ]
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were: V* O* D: [& K& J" @# w
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
, z1 L/ V# h6 Qbankruptcy, they already have debt financing in place./ h1 J+ L# z; F( h8 u$ |
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
1 n- R4 N! M& a8 t0 M8 ytoday.+ n% i! w7 v& u+ ~
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
: E/ K9 V0 p& B! M2 Q. nemerging markets have no problem with funding. |
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