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发表于 2011-9-17 13:16
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Current situation
5 R" o/ u$ t9 G W" U% H9 s The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 ^1 p7 [7 n! W9 e) A4 r6 @as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may0 B8 {: ], `" x: i) V
impose liquidation values., |9 g0 o* W: I2 n! t7 S
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 n7 ^* P" ?" z2 F B5 g
August, we said a credit shutdown was unlikely – we continue to hold that view.
- D: U& f' J: T+ W- @! Y The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ ^$ K% m% f; H7 |/ Z% y
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.1 Y7 b- e4 s0 B4 K( ^0 r
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A look at credit markets& s. \9 r2 X2 x$ p7 a
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 B5 w* I! L( S4 i$ y+ eSeptember. Non-financial investment grade is the new safe haven.
' Q3 M9 T$ P' x+ o* m1 i* [ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%$ |, _. j/ c/ b5 ^) N4 P+ W9 K0 _
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1) S+ L/ r" q" c4 w0 R7 W
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
. H/ |/ S) C j+ Aaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade/ H, W" T( C/ N j; j2 g$ h
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
+ U9 x$ C& Z3 j3 Xpositive for the year-do-date, including high yield.8 ]; F$ Z1 v: Z$ }$ q L! d2 _6 w
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
" J0 a' [0 n9 x5 c. `+ E' e1 jfinding financing.
8 P" R" d/ T- T3 J; Y. U; Q2 U- y Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they/ z6 k! }2 k h$ K) \
were subsequently repriced and placed. In the fall, there will be more deals.
]7 g* ? O: ~5 R$ d7 ~1 U Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
& k% ^) M+ f* Uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. f" l) u, i t: O' jgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
" i$ s3 X, H* ?! Ybankruptcy, they already have debt financing in place.3 T' S/ L' f; O# x
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ c9 X/ U$ C, b7 H- ]2 D
today.: v8 l2 g, k- \ w
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in2 P$ S0 d9 `/ q' U5 h
emerging markets have no problem with funding. |
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