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发表于 2011-9-17 13:16
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Current situation
% a* b1 h, f$ v. l' u4 ?" z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long6 _. W: N: ]2 H: ?; Y1 S' W
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may" V @* ~( h* a" `0 F: n7 h' X
impose liquidation values.
! F" I2 N6 w. D2 S' k In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In0 t, |8 @( k/ N, D
August, we said a credit shutdown was unlikely – we continue to hold that view.# d1 Z9 W5 L! B3 E5 ^7 [1 l
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; a( L7 J' s) z) Y: w
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.; w6 R" w' _8 _) D
; z+ g" M* b- }, nA look at credit markets
2 g: b1 b7 a( c Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in; L$ h0 b8 g) i+ {
September. Non-financial investment grade is the new safe haven.& h( w5 z ]: s) k, o8 W! a- F+ `
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
( q$ Y: u) ?5 A! p+ T# W4 Gthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
1 ?* {7 E* ~. _7 j, F* pbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have V* j- G# |3 Q
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
! |2 x) P; f% H# N2 JCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are9 z- E- x+ a% g" S9 ]) ^, \9 E
positive for the year-do-date, including high yield.5 P) w9 F6 d9 | z2 U
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
. q2 |( O/ K% ]3 q& Y1 q' Afinding financing.
( C" }* M6 b3 w3 Q) L" Z# b Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
% U! E4 E5 s6 q9 [: |were subsequently repriced and placed. In the fall, there will be more deals.
* r% w0 M0 h2 q0 K# s Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# s |( Y* o- w1 b& e
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were+ q: i9 _) g$ B3 @2 K
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
4 k6 a6 D) l0 p* [4 j# S3 ?+ V4 H6 ubankruptcy, they already have debt financing in place.
' W/ i* P$ J* H$ d2 ^7 J European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain* I8 r, v+ ^% G( }- H* y) \: M
today.8 U0 {. A# C, `+ {2 l6 J7 k
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in5 z4 H4 ^5 G: O# Q3 c/ f
emerging markets have no problem with funding. |
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