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发表于 2011-9-17 13:16
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Current situation
+ x! t2 t1 Z8 S/ ~4 I9 Z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long C# m s E U& p
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* _7 R5 M9 t. o2 F
impose liquidation values.5 a% f# z; P0 N7 b6 V
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
+ s6 \( m* ?8 u! d# hAugust, we said a credit shutdown was unlikely – we continue to hold that view., _& R! ^3 q+ L6 ], G! Y/ @
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
) A0 v9 R) L! H9 f' s& lscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets" q( H& p7 k) n+ k6 @: q
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in- G1 K. F/ ~: z
September. Non-financial investment grade is the new safe haven.6 h1 s! O/ ^* i8 M j# F
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%( y: b2 ?+ v4 v3 K, g- I: `8 E; m
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1: Q; @( R1 B1 j
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have4 Q$ A0 |: }" G/ [/ R4 s
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
, t6 x0 Y( ]% c- I2 i2 U* _3 TCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
& i" X/ p* ]6 a" J/ S& Ppositive for the year-do-date, including high yield.& n m* U% L) O
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble3 V; k$ s; u3 S3 S. H
finding financing.7 y7 ~, L; J: d m" C
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. h4 u" v& t7 R. Z; n; w( M$ o/ \. G5 Vwere subsequently repriced and placed. In the fall, there will be more deals. h, T0 h8 k) i0 j z& G% Z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 G. Q1 q8 S0 V' r
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were) u. u \# ]! e* B& _) x! H
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
9 ^- z4 ?0 V$ g2 z: ~bankruptcy, they already have debt financing in place.
$ Q- O# O3 L$ x& n2 y0 l$ K' w7 ^ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain& t8 Z7 M# }' Z- n
today.0 X1 ]1 ?" S( ^/ u: J. q2 h+ M
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
) _0 r* q+ g, H N1 Eemerging markets have no problem with funding. |
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