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发表于 2011-9-17 13:16
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Current situation% h. }, _ {9 H
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
' g) p& k& \/ K+ ]: \; C( A7 las funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 b+ g9 R7 e4 [' W6 s
impose liquidation values.
) G' c& r) t$ ~/ A4 y8 Q( y( [% l" { In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In2 n" n7 @5 W' \1 W( Z+ Y
August, we said a credit shutdown was unlikely – we continue to hold that view.
; [! c* [8 @: L1 l# t) w6 s The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 w! J& F2 ?, K( ^$ F' k1 a& e1 Cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
2 X4 r& F; P, X+ X; a! i6 l% ?& {) K- \4 [3 |6 P
A look at credit markets
3 ?4 M; g. z! c3 R3 \6 D, X Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
5 Q; H( w8 y/ P6 n7 GSeptember. Non-financial investment grade is the new safe haven.
- U! W& v' |( N8 V High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
+ u4 Z5 [( o# B' I# ]4 ithen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
5 U* i7 }0 E7 R' v2 Rbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have8 C- Y! k) b+ R2 e5 `2 q1 M# v. x
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
5 P; b9 }8 ], s0 ~# i/ fCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
! _4 y9 Q7 G2 t& i F# gpositive for the year-do-date, including high yield.
+ d' W: e1 t# u+ R5 ?# x$ } Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ d& l: `, f% i9 e# a$ h+ {& A3 Gfinding financing.
7 W3 }$ j6 Y* s Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
- F2 U: P2 L$ y4 d" V! m* F( Iwere subsequently repriced and placed. In the fall, there will be more deals.
; r$ |, M) t F) t# K$ D Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 q- R4 o5 j( H. q) f! ~- [is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
/ T5 B) Z/ [' ~5 I; f6 d( ^going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
1 G, m5 e4 x9 J7 I3 r" q/ h& i, ibankruptcy, they already have debt financing in place.
2 b" t! S9 U! t Q4 @ D European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
/ \) b/ x- `+ s" ftoday.
4 I) B" X; }! Q- Y Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in' r8 M/ c V9 u4 {& N& U8 m
emerging markets have no problem with funding. |
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