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发表于 2011-9-17 13:16
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Current situation
. z! e) I) M2 Z' p1 m% b The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
, M4 a9 G) w9 `3 y% {% Las funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may; ^8 f+ D3 D+ E
impose liquidation values.
- G/ S! y) `# R1 H1 f5 v1 E In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
% D+ K4 m) t3 J, zAugust, we said a credit shutdown was unlikely – we continue to hold that view.
1 x# X8 w3 C9 b3 C; q& W The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ N9 X8 B) S* W7 L/ Qscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets. h$ v& O9 h" m, d$ y5 p* X
& E j3 }( Y( M! G% }A look at credit markets
0 h& L/ w0 T& I$ w. h& w2 c Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 }) }& v7 E# N$ d! |, g, s& a3 ?September. Non-financial investment grade is the new safe haven.0 a% A" L+ B! K, ]
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%5 b! }) j* [. g6 P J
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
% g4 o: S& ^' x# abillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have3 o# s/ b; o& O2 z# J: U, t
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
* `/ x* ~& O# u9 C5 NCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 {2 f3 m& ]$ _4 ]! m
positive for the year-do-date, including high yield., t9 |; A+ N+ ]' }7 \$ O
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
4 S) T8 E9 A+ ?+ H7 ?5 e. m) n6 pfinding financing.# T' i8 m f5 S, t K
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they9 j! @7 H" E8 r& a$ O1 Y; J! Y
were subsequently repriced and placed. In the fall, there will be more deals.
4 D h( b' |9 _( W" L Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
0 r+ ^6 L( D. C: Uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were5 ^ \4 J1 z5 ]' e7 P2 O
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for" E q7 S' Q6 a3 ~, {! F
bankruptcy, they already have debt financing in place.( n) |" t/ h0 _: t
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
' q: J& U' B7 H! mtoday.
( e0 f5 Y6 B! j; {2 k7 [% G Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# I: z* a0 G' q7 F" b1 N; T2 W1 X
emerging markets have no problem with funding. |
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