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发表于 2011-9-17 13:16
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Current situation
: h# T8 L! m ]+ h5 A! p The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
) D* F, W0 z& {( M+ G. {as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
* r J4 W7 d+ }0 Uimpose liquidation values.) b( d' }; N* |0 U0 j6 ?- U
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In: E% X# b' |- N$ L& U
August, we said a credit shutdown was unlikely – we continue to hold that view.
9 Q$ C, E7 `3 Y* I9 H! g The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension( q. F9 U$ X% f5 M6 I* j' e
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.! }7 v8 v/ C7 L5 t: e
# S- l) r1 K, h0 O" DA look at credit markets2 i* T3 F3 G" T* e. D% e
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in# X# ~+ o2 ~$ p2 G6 {
September. Non-financial investment grade is the new safe haven.; B3 n; E D6 E6 X, R: i, g
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
; ?" ?+ m+ X8 u" c& v9 t7 h6 ithen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 e2 k8 E j7 O7 c
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have: S0 i2 ? z0 a5 P2 a
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
0 [- }# m- ^8 n# M0 B& D7 ~CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
4 B, V: r4 L) J+ qpositive for the year-do-date, including high yield.
g. k8 h& I0 b Mortgages – There is no funding for new construction, but existing quality properties are having no trouble1 v' S. h% I7 K, I+ o; k
finding financing.
5 l; W# a5 C3 p1 }! x; G. u Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
. U0 r7 D2 j o8 t2 Ewere subsequently repriced and placed. In the fall, there will be more deals.
7 [, o: C4 B1 r5 C U Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
- K, \ f+ I" `5 g1 ^' S6 Ris now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were$ u, n' R [0 i3 \
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for# n- V! `% }) F1 N
bankruptcy, they already have debt financing in place.5 U0 ~- O4 Q6 N8 U! F
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain9 S- k) A; L6 j/ P& ]9 k
today.: z5 A0 x. r3 g3 y
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
% o6 F8 c% x8 ?2 a! ^/ D. Uemerging markets have no problem with funding. |
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