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发表于 2011-9-17 13:16
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Current situation1 l5 p: q# C2 t9 z
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ Y9 c' ` a/ F2 l8 H) D) y+ w
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
. ~2 D. \/ B; a+ Pimpose liquidation values., C7 o2 j7 F i- C
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In$ }% m5 k+ d. @8 E( e, K1 y" e
August, we said a credit shutdown was unlikely – we continue to hold that view. \# }) P2 M% L/ }" [* @- G
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 y' X# g; L6 S) c# \8 d
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.3 @: q. @) Q. B
& }" R# G* \' F6 A' L6 s
A look at credit markets
8 X1 ?# M9 z& Y* g' ~9 m! g- J' _ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& M2 T, _: `; ?% y6 rSeptember. Non-financial investment grade is the new safe haven.
4 E* p! _+ L0 {0 _ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
8 L: L6 D( P% y% v7 I0 S0 F, Tthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
6 j: v7 n! k! K7 I) d' {billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- }: J# _+ Y% i; f* V! a( Z
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
4 n7 K7 j* F7 V3 q) X. r7 Z: rCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are# \, {7 g$ I- j. U |8 m4 T- }
positive for the year-do-date, including high yield.! _- Z1 |' F; L" u2 t3 v7 f8 B
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
4 d: s* [4 H" Q( Y3 f4 Hfinding financing.
- Z9 [4 B6 \' n9 p Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 n5 H4 [ h2 N: T+ o \9 J! |were subsequently repriced and placed. In the fall, there will be more deals.
; w# @ @; }( { Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
m2 f& D1 v9 p4 q. S8 n4 l& tis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were! h! D& U/ L7 }+ W
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
- s) c& l z8 D( abankruptcy, they already have debt financing in place.
7 y# j4 L, M; Q7 e7 } European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
k; E$ j/ C! I3 c) Btoday.
7 U2 J" R/ T, m$ I3 q, L Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in0 s4 E5 H# z& s& T3 [5 s, G3 p
emerging markets have no problem with funding. |
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