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发表于 2011-9-17 13:16
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Current situation
& [& s, d6 y: `% w' I The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long3 `1 U; E/ G- F2 c( T. i$ Z- D
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may5 A! R$ f7 s( p0 U$ @1 [
impose liquidation values.
- f6 Q, G) b8 ?# i8 t In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
A3 x @$ h0 {August, we said a credit shutdown was unlikely – we continue to hold that view.
1 f0 I3 k2 P* i0 A6 H1 R1 a The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension1 Z3 O4 N. f [7 d' {( R' `9 j
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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" Y' x; Y d* `: ~A look at credit markets
8 _% o3 W& N) W$ x6 H Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in6 E9 ]# G! G) ?$ U& L0 R
September. Non-financial investment grade is the new safe haven.
5 @6 |, L+ k" s% J u' j$ K High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 `- G: O) ?6 ~7 E
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
% ~# }5 A+ _/ H( P8 }billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* o9 U2 Y+ Y- saccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
& U6 f$ @) T( ?1 U9 D$ R! H7 wCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are+ G7 ?6 `! e$ O+ a% v4 [* b) J
positive for the year-do-date, including high yield.
3 _5 J6 Q! F) Q ` Mortgages – There is no funding for new construction, but existing quality properties are having no trouble W7 J6 B! B5 U/ [6 x3 r
finding financing.
6 n3 c# K( A5 Q& f Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
0 Y; I( l& U7 d5 jwere subsequently repriced and placed. In the fall, there will be more deals.4 J0 t" e; w2 E
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 I6 t# X+ ?' j* |9 k; I5 k* G1 uis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were. E; Q7 e3 x8 O# S
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for( @, {6 R: I3 y" D: \, ~! W" |
bankruptcy, they already have debt financing in place.
6 T; s' s: D! }9 B6 |1 K European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain# I Z5 U0 R2 M: m) s: [( k5 L
today.
4 I$ M4 {' [3 V0 N: J' P Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in, T& U7 f7 |% P/ Y% }) ?: B0 r- M
emerging markets have no problem with funding. |
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