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发表于 2011-9-17 13:16
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Current situation
9 S0 N5 j- X. ] The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long9 j! V# |8 @3 E8 W
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ o2 L) c; {( c" W: i. G/ Ximpose liquidation values.
, R7 D4 j# v9 z% Q4 k3 R In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In3 }# j4 ?7 f; V5 ?6 d* g( l. e
August, we said a credit shutdown was unlikely – we continue to hold that view.
* o8 Z' l/ z. Q5 ^( ` The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
% s! y* ~2 Y _1 r; N x! X8 Ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* r1 P( r) l; ]( r
. R- W: G V% x q9 }
A look at credit markets9 ~/ m- C- x; y0 G3 Y! r& E8 s1 ]$ V
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
' b1 U. Q3 D" BSeptember. Non-financial investment grade is the new safe haven./ J% O3 v9 q* v% v
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
- k, u* d2 K0 [8 f" G, Zthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1/ Y: y: D" G: y0 L
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have) ?% v% ?8 Q" D# o
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade% C' b2 }5 n/ b1 a
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are& Q" m$ Z: s r {4 t: T I6 H+ v
positive for the year-do-date, including high yield.! M1 K) z/ i+ ?) e) w
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( R+ q# f: [6 d" R# efinding financing.8 ?( B! A, n8 f# q( p5 B2 ~
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
; g* L3 F) Q- |. b, vwere subsequently repriced and placed. In the fall, there will be more deals.
) m% i0 U! C- u$ r2 i9 w% V Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# q5 C5 g% e, R0 T% L
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% T3 E0 I: {# z6 J p1 G2 Bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for/ J I& p3 i5 u0 C8 H1 Y8 W& q
bankruptcy, they already have debt financing in place.6 @1 W* D/ R# p' g# X
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain1 q: w9 b8 X/ b( _8 ]' U
today.
4 e) b2 n+ f% A Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
1 d9 N: G- w% [, Xemerging markets have no problem with funding. |
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