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发表于 2011-9-17 13:16
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Current situation
3 v* o6 M: L# N: Q! C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
1 t" D2 b3 V9 V" v$ s, |as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
; J3 F: V2 n" K6 a& O& yimpose liquidation values.& T; n6 _+ y8 l! |) r! @5 c. U s
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In4 u1 u# @( D! L# J( F
August, we said a credit shutdown was unlikely – we continue to hold that view.
$ T( _7 s9 Y5 q. Z; F( F4 N8 O! g The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 y1 ^" a" P% Yscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.8 a6 p+ P" |* I# Y. x
+ ~) s A9 K9 m" Z
A look at credit markets7 U, T. r* W: u n8 w [, F% E
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 q% Y3 J+ t0 S4 p, m
September. Non-financial investment grade is the new safe haven.
: S8 d/ F5 L- q$ Q: m3 G High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 D& k; t O1 r3 S
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 O' x, h: d$ i$ p' B4 [billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
: l2 H w; O+ ~, ?0 E" a$ Waccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# {7 B; S. l; v/ K: d$ K, n- I
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
5 l9 ?1 `% u' f# H. Mpositive for the year-do-date, including high yield.5 L" x: {- m+ l7 H: t$ q9 G/ X8 ]" ^
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
6 Y+ k8 c/ H: _* Lfinding financing.
* U, I2 P6 Z' S" e* {% Z Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
9 Z8 V* `3 {* r4 c {: ?9 ~were subsequently repriced and placed. In the fall, there will be more deals.
f& e2 s: P* k" G' \; }3 _ v+ k Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
8 O, N3 x, _0 [* ]% D* jis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% S# h( ~8 G3 b* P7 sgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 l8 J9 l, r; r$ x% Z" V
bankruptcy, they already have debt financing in place.- q! [" x% L0 L/ \8 a) Q6 }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain5 e+ D$ r1 L2 f
today.
6 v' [% E$ k" s5 K6 X Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in) N4 s0 i& E9 Y' l+ L
emerging markets have no problem with funding. |
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