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发表于 2011-9-17 13:16
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Current situation
) `/ w- W* N$ ~' i The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 \) y: Z* n5 a3 S& A
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may7 a2 n7 b( q( Y" L% w( O6 S
impose liquidation values.
+ n ^; s3 G0 b6 m6 V1 G In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
" o8 k' L/ W3 f0 W: D% z3 d, PAugust, we said a credit shutdown was unlikely – we continue to hold that view." h" m# c: j. a0 e) n6 ^0 T6 K
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 }2 s- f$ ?' qscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.6 N) _ R$ `4 V2 |7 X7 [. A
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A look at credit markets% } ^. r* G) y f8 Q& b
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
% O0 o; Q) s0 h0 tSeptember. Non-financial investment grade is the new safe haven.
3 K/ j3 Q/ G0 e; m! v High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%. X3 m9 M: H- {5 q$ V7 [4 D" l
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; F& X! \6 T$ ^billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have' t1 |* o/ m! Y$ `, H& ]- \0 J ]* s
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade* ]; g( K0 t6 [
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are4 T* Z0 y$ x1 d; E; |: q6 |
positive for the year-do-date, including high yield.% m; E# G: g: Y+ k6 }% D4 `
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
2 o2 H+ f9 e4 Z3 V$ \+ Efinding financing.
4 ?" o. i& s% {! |2 ]3 n0 V% t5 q' m Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they( i, K# r* {$ a& a( N# d
were subsequently repriced and placed. In the fall, there will be more deals.
# {6 f5 y9 U! F Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and. s' m" e- Q7 U3 O9 B# V) \
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were4 f" `. K, [ d% Z4 U% B0 e" X5 R6 k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
# s% b* C) C# L" N& F' ybankruptcy, they already have debt financing in place.. ?, O+ l; Y% ^7 T, N- Y$ W
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain' e3 i8 x4 g; g9 g& {! c
today.$ q- ^2 c4 |1 X) i# N
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in( J2 \0 ^2 ~ t1 m. G1 ^$ Z
emerging markets have no problem with funding. |
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