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发表于 2011-9-17 13:16
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Current situation
0 y1 A: ~& r- l A% W' d9 a The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long" _, E* \/ Z4 ?, d9 S3 z5 ]+ `
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# ^7 V( k8 u, e% zimpose liquidation values.
7 V4 k7 J8 R1 S! D! |' k In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
, W. @" ], n/ L- T+ X& [5 _$ PAugust, we said a credit shutdown was unlikely – we continue to hold that view.+ p* G" r, q2 g; |: ?1 m, e
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 C5 N2 O. {# p; z1 t
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.9 f) v2 u: I, |8 k9 d
! b# z1 D' `: N, z" k/ [( [: WA look at credit markets
) r$ i4 {3 _* p$ ]7 ^ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in) M" W) W+ d# S- j
September. Non-financial investment grade is the new safe haven.( g ?0 z2 {/ K1 F5 b
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
- _' r9 h) B+ R3 o6 X* {# R. d2 d8 rthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $12 ]4 o! A @( I1 b
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 t' \9 v( Y- d# Caccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
) J& p, u. f$ m$ }% w4 NCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
7 d( E w9 V% I b) @% @: X( P# Q, \positive for the year-do-date, including high yield.
5 F# v; @6 W& G$ r B. T$ e Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
- E9 E! M4 w( g6 yfinding financing.& L0 ^& q2 P. Q, ~3 ^3 E
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
' A/ m( ]. F: i& g6 ewere subsequently repriced and placed. In the fall, there will be more deals.. B' m3 I/ ~# u2 T2 G$ r M/ r
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 [4 W; B* H! T! G% l
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 F& g5 D5 E# u! c) I7 mgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for, Z, k6 D" \7 }) E# E
bankruptcy, they already have debt financing in place.$ ]2 l) h/ L6 E9 E
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
( n( N' l8 c& Q8 m, x8 L3 b8 Etoday./ j/ @* W4 Q- F( I+ ~2 y8 {4 I% b
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
( l" g- H( b0 u/ Qemerging markets have no problem with funding. |
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