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发表于 2011-9-17 13:16
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Current situation
' j% p8 o1 g% g4 g The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long, k& S2 j- L5 @) k- e! f* X2 u5 p) P
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may( {7 h) i3 d# T7 y( z1 S4 t4 u
impose liquidation values.: M; C: {# O6 A/ M. e! [
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In5 \* m4 q3 S4 K
August, we said a credit shutdown was unlikely – we continue to hold that view.+ R8 f" f" I. k( Q( K0 w% X9 b
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension( y( j" Z4 W% x0 o: C
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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4 q: p8 X: V) ~0 v* ^: i GA look at credit markets
* w! B6 B3 P% T9 G: g Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
0 B. d# k0 X! p3 R: mSeptember. Non-financial investment grade is the new safe haven.
6 @# Y1 z" Q# b' S7 m) { High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%7 v+ {- ]; {0 |6 t8 {
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $12 O: w* h2 b5 U& ~3 Q7 P- { B
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 a5 e! L: I+ ~( P* n
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ w, Y% F+ Q5 j% m
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
. S5 ]. {& z" z6 S# g9 Gpositive for the year-do-date, including high yield." ?- y q4 a1 J$ ^
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
. @3 ^- q0 A4 u' f! {- hfinding financing.
5 v' l+ g/ E0 I' [% h/ E Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they( t) f6 N. c" Z- T g! g, h/ R
were subsequently repriced and placed. In the fall, there will be more deals.
9 `; Z. T! J3 v$ f5 e8 i1 c% A" f Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and u# z, ^4 n1 T! z& A
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ [* U: ]1 Z3 rgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 }& V5 b/ ^$ B f. x. g
bankruptcy, they already have debt financing in place.: e( u K; X/ k9 [ `- k
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
8 y/ ~* ~! {4 E/ l2 C, i! ]today.$ {: }" R; P6 I
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
" d8 w0 Y1 P8 r& l: i) @0 jemerging markets have no problem with funding. |
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