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发表于 2011-9-17 13:16
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Current situation
) |& ]4 q" h6 V' @. k3 P1 B The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long6 v. }0 O, L R h: Y( d) c) O* @1 ~& a+ `
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may; E( y3 t2 ~8 A7 J( i- E
impose liquidation values.; x* t$ Q' D5 T
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In4 h1 F1 @8 Q) ~) \* ^
August, we said a credit shutdown was unlikely – we continue to hold that view.
: u) f5 I- z& w* \9 m+ s- A The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension# X4 T2 @. Y. L) Z
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets8 k. v. r4 m; ?: G: m- ?, ^
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in' w( ~5 `7 L( S+ i" b7 A, @1 q
September. Non-financial investment grade is the new safe haven." E8 a, n# K* W V" h0 Z4 ?1 P# o
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
- q6 D% S3 D, V& gthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
, \2 ?6 g. P( }5 nbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
( }" o' s6 E5 _$ P4 `7 Yaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade" m! ~/ c- m- U; V4 U" z: W5 `
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
6 s/ S5 \4 t2 T$ u. gpositive for the year-do-date, including high yield.6 N5 ^+ y# N% Q( s2 r5 t+ h
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; b) o" f5 n; Q( Z& W
finding financing.: a: U& s4 C3 J) N7 Q/ `5 H
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
9 @2 x* N7 |7 N2 W6 Cwere subsequently repriced and placed. In the fall, there will be more deals.
- y6 {& j8 G+ K' q Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and' A; c a( ^: t' d! V3 h
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 J& n) Q5 n f8 r3 K
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for1 B' f& `/ ?! u( q
bankruptcy, they already have debt financing in place.( ^* }$ V5 e7 G* r
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain9 B+ m0 q! ]! J( p1 r+ s- w& v) }
today. N2 T; _0 z. c+ J6 H
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in" j X2 [5 `) l$ A! w/ X
emerging markets have no problem with funding. |
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