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发表于 2011-9-17 13:16
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Current situation
1 ^4 ]# k a6 S: g; Z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
$ B1 y5 u2 V3 p* Aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
% _# g( T- u& C8 Simpose liquidation values. J C, ?8 k/ O3 {
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 M/ S- F7 W0 r
August, we said a credit shutdown was unlikely – we continue to hold that view.; {8 | g; t9 K/ f. l- I
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension0 {6 {& X. Y* B) h/ l# q' i
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
! i' W" v0 G; c% X, g& T9 t Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in5 C. S: Z% M$ S/ ?- ~) i
September. Non-financial investment grade is the new safe haven.
# ~$ z, L: [3 O8 C High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7% Y* e1 m4 D6 P: ~: u) B; K
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
% p2 i( |# t) a( X) l+ ?billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( p4 M, z/ k+ C( p( x+ ?
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
0 ]2 \: O# c# |+ Y5 O1 S0 z5 I: qCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 h2 N1 m2 ]* `6 H+ c4 I
positive for the year-do-date, including high yield.6 l5 W+ p* }4 y: f2 D9 ]4 n
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ S- y: e. w1 R: F- s8 w$ V
finding financing.
! t9 h8 Q. m' o! n: B Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 d5 O6 E8 g, X4 f* J
were subsequently repriced and placed. In the fall, there will be more deals.6 I' L) Y5 C; i
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and' w7 j8 _" }* L7 d
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( }2 ~. G+ p8 O0 K: ~
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
' J; v9 D3 R A( o# R# |' bbankruptcy, they already have debt financing in place.
! Z+ O9 o9 W7 O European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain) Z# K: w$ ~/ a- y) d0 P2 s5 f% \
today.
) W2 L: M$ o f( j+ ~* Y+ u Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
, Q7 u! }5 E1 R, s0 jemerging markets have no problem with funding. |
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