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发表于 2011-9-17 13:16
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Current situation
$ P: Z) @. N' m: P3 e, K' m& e The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- G7 B% B3 g2 Z5 q
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may, ]0 c# i# S* K, S
impose liquidation values.
" [4 u0 R/ l* ~ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In. S7 r3 ?2 }7 {9 O( | k Z6 F
August, we said a credit shutdown was unlikely – we continue to hold that view.
9 U7 X/ S8 b1 j& K0 W, [4 h0 M The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension8 w& _5 I) }+ g# x% O
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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; B; R3 _) `# \/ h' JA look at credit markets# A# k& D+ J( M; j
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 s" s9 o/ u7 f; O; _9 b3 I1 D
September. Non-financial investment grade is the new safe haven.
, F. T- I6 w; ?$ ?+ t High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%( }, e7 n& n- r
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $14 K) e; K5 u3 {9 n. c# }
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
9 H0 \- t, |4 Z/ n+ Q- `( baccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
$ ^0 K% \( s8 I% f0 S+ tCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 k0 T. B, Q5 s q( wpositive for the year-do-date, including high yield.) d5 p2 J. ^7 f: G/ t7 k/ V0 q0 g
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble! Z* E4 H+ X1 D
finding financing.
0 Q" l2 o9 @6 j% y4 ]8 H1 F( g Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they' _" R" C4 }4 l2 t
were subsequently repriced and placed. In the fall, there will be more deals.7 w7 ]) ]. E! N7 _) d
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
. y. U7 N1 m) c* }# ~is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were5 w; \/ i% c* H% O, t u$ [
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
" z: b0 D$ j w* r- r: bbankruptcy, they already have debt financing in place.
# ?5 [& ?. I1 g- `" L1 L4 g- G l European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain% E6 T% d( T' Q5 O3 f7 Y- w
today. U! @8 A' H( r* w- W1 Q0 T' L9 c
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
, K: E7 d8 F* gemerging markets have no problem with funding. |
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