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发表于 2011-9-17 13:16
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Current situation0 u. c+ d6 p. x- J- a
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long1 D* T3 N) e: y
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
2 w4 w( @+ I4 i$ Bimpose liquidation values.# s0 S5 C9 M# S2 T
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) R- K% F* w2 Q dAugust, we said a credit shutdown was unlikely – we continue to hold that view.
5 v- i; e( i, D% V9 N) y The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 F, j2 s& w& s# wscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
& \: z+ B! O" {: S" u Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 w% }7 Y+ p- m D) H9 } s) rSeptember. Non-financial investment grade is the new safe haven.
0 i% }6 t5 \+ L; L! U" A High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
6 C2 @/ q" H* W$ Kthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
5 e$ ?; F& @: p- _ Z7 Q' x6 }billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have0 |5 q8 O o' x! Q8 t+ g2 n2 `
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# }8 u- V( I1 U+ S
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* v1 v3 P2 b6 G; W
positive for the year-do-date, including high yield.
, Z, V' I9 |" e, U% U9 h Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
B* {5 ~0 }: h7 lfinding financing.8 Q7 ]# z; E; n
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
8 E, V9 F- L3 c( @: awere subsequently repriced and placed. In the fall, there will be more deals.
5 i2 N0 G. a+ \ Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
7 L3 R& c4 D: |/ _0 G$ H* zis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% M/ g/ f+ P0 U' J: }going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
2 i+ p, Z4 v$ h0 f' Pbankruptcy, they already have debt financing in place.! V9 p3 {, T0 q; L" E
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
+ U- B0 p9 i: H0 Ctoday.
! }2 q9 [6 Z& \( b Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
) g# Y: U! z0 N% k% r# jemerging markets have no problem with funding. |
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