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发表于 2011-9-17 13:16
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Current situation
8 f- [) h e: w ?5 M ~% \ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long+ ^5 W7 o$ M. P* r, W
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
& {1 T7 a4 V/ L0 iimpose liquidation values.8 }) K+ g/ x% ]$ B* y6 M |9 x
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
% W! l% Q+ O! z. V9 x- bAugust, we said a credit shutdown was unlikely – we continue to hold that view.
q" o! m# `0 w& { The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
* o" K" c v/ c: \" H( zscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.' t T* x6 k% T, g+ ?
$ _7 ]7 `% b: s5 r
A look at credit markets) w# o) D. U3 f \9 C; S' v
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 A ]" l5 Z3 J, p
September. Non-financial investment grade is the new safe haven.
' B) V, j3 K3 S4 } High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
9 U3 }! b' w5 [7 _8 U1 H# a0 Mthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $12 ]" s1 d% ~9 r( R
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have7 y, d0 g- U, ]% d8 O
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
; t. M5 _6 M3 eCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
+ u9 x# W- H- N! Z4 I6 s/ X) [ A& vpositive for the year-do-date, including high yield.4 }% ?. x- ^4 d5 n+ N
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
}; D$ [, K2 X( n! H' W* Zfinding financing.
; w5 k x: V/ w- x' r/ p. h Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
2 j* p/ N% F H5 Z ~: P. gwere subsequently repriced and placed. In the fall, there will be more deals.
9 x I8 Y" U+ e7 v Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and, i' N, T. p( _5 B
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were: ^( l$ A6 F1 D
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 ^ a% I* @/ H# m3 B3 P6 E/ q7 j% U
bankruptcy, they already have debt financing in place." r+ U* B' Q$ T, B: S, e7 o/ r
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain9 [7 L& `7 |' X+ R5 i( v: j" P! x. z
today.
) T& U3 r2 I+ ] D' y/ _ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in) f. T% V7 M* f
emerging markets have no problem with funding. |
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