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发表于 2011-9-17 13:16
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Current situation
, ]4 U) F0 ~% X: l" `2 x; g The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
: t+ R) o7 `' G$ D! Aas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
! Y% Z- q% k) R2 t9 |8 pimpose liquidation values.
% b. B+ r4 L+ A; }6 ?9 J# g In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In" w: v2 T- C" u q- W+ e! K) }
August, we said a credit shutdown was unlikely – we continue to hold that view.
6 O# U0 d- W2 g- M The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ f. {+ n' j, a' J1 t0 Pscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
4 e: X2 d0 V* U( `# H4 n9 p' s9 d! u5 j
A look at credit markets
( f7 ~& y6 Z% U' o0 r8 {% l Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% V; l/ `* K6 N2 ?3 f0 G! _
September. Non-financial investment grade is the new safe haven.
5 {) H- j5 L P" \: u/ i! N High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
{% u6 V" N8 A+ ]5 ?: ~% N" }; cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $19 Y7 R& A# ]$ u1 U) i0 W* ]
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
( R0 z, s+ D# w. _% |access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
& m" d0 i) }) o) `CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 n2 u6 Z* d/ X& b2 {0 V
positive for the year-do-date, including high yield.
% A8 _7 j; N0 j/ D" u. ] Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
1 @9 n2 r# G, g# @) t; I0 mfinding financing.6 {3 h0 N6 a$ U
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
: m s% ?/ E& \9 ~; G) Zwere subsequently repriced and placed. In the fall, there will be more deals.
5 [; Q- P. L: U* T, a+ V# t Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and4 X' h- i, Y6 H1 d7 [! v
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# X( ~* J+ ~! A8 P& [
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
& L3 A" H+ s5 P7 T; A( C# J/ qbankruptcy, they already have debt financing in place.
' O/ i8 ~5 g- o1 B& i. l European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
s* X7 `. y6 y. c4 X2 i: ]- Y% xtoday.
4 o, k f w M Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
+ `' x' N* n1 T d& [: lemerging markets have no problem with funding. |
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