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发表于 2011-9-17 13:16
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Current situation
- z) I- u4 _. @; C$ o4 O: C' \ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long( d/ G3 p2 \0 {6 I7 n4 c' K
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
) n. {* Z4 ]0 ?impose liquidation values." X9 W) N, A" k2 H4 i8 v9 r, E- s* k
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
# g; M+ R; F* M9 @) S. MAugust, we said a credit shutdown was unlikely – we continue to hold that view.- L9 R" C, x2 k9 [. R) z" v
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension6 U% G; U# D" Z7 J2 q# ?- e
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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; A% v; f! v S$ ~$ mA look at credit markets/ F: L5 W7 f- b2 g2 m- M5 o
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
7 v5 L1 B4 H, ?* m; gSeptember. Non-financial investment grade is the new safe haven.
5 R1 l+ }7 C. P G( g0 z High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%0 I: j4 L0 z7 v) y! b) r! b
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
! f$ T0 Y( {) u1 R1 G) Ebillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have7 Q; g: Y, L3 t2 E/ T/ m5 \
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- \, o# D* B% I( \0 M8 `CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are$ M5 d! Z/ ^$ t1 p, y7 `
positive for the year-do-date, including high yield.
3 X) m! u$ q3 P( @& \! }+ _4 S- Y Mortgages – There is no funding for new construction, but existing quality properties are having no trouble, ]0 e1 H8 Y2 u: S; q @1 ~2 k
finding financing.
1 d4 f* E4 G, X8 G7 E3 k3 Y Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
' Q( z6 m$ Y- ?; \$ K: o: j6 Swere subsequently repriced and placed. In the fall, there will be more deals.
g9 b1 r0 G5 _) l7 ], X' q+ j Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and1 K( ~) `9 K% F+ N9 I* Q
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were6 r+ S" p0 j( f+ ]1 {3 S! V
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
* M; v* _. r, F8 Zbankruptcy, they already have debt financing in place.
9 v8 }1 ]4 J7 \1 G9 A0 v. D) o( h European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain: A& _5 P0 C- e# J. c8 }+ x
today.
* {2 O; W% `: X3 i( g3 ?/ Y4 @ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
7 D$ I, Y; Z- X- S" y0 Z8 Xemerging markets have no problem with funding. |
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