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发表于 2011-9-17 13:16
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Current situation" }# P! T! [. i( h
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
' u( m- s# I! gas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
; r) F% @0 L9 Limpose liquidation values.
6 n8 `0 }) O* ?! Y1 b+ b. O In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In8 q/ E0 `, z+ D" C- i- H3 x& H* x
August, we said a credit shutdown was unlikely – we continue to hold that view.
5 ]7 T9 W/ {: Y# e/ E The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension2 G6 k, D$ c, ]: K: @5 J4 l; y
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets( f( O V( _' ~7 Q. r
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in7 b* Z- H: W7 P* o0 g r, X1 C
September. Non-financial investment grade is the new safe haven.% [! Z R3 F6 ^* P. O5 z
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%$ O8 h0 R) T' z$ e% M
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
/ q" K1 |8 m6 {6 Zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have; N% \% i5 _+ e8 C9 Q/ L6 s) W
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade" _! d- Y, @+ q0 ?* N
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
7 R6 q( }, K9 L& ^positive for the year-do-date, including high yield.( m6 d; q' @/ M4 g
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
5 y/ g* o: h( A N: @ J5 h3 f3 H1 f& Dfinding financing.$ _: l, R' K% p5 `( v/ K
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
5 s% i5 o0 I8 Q( D7 s: N( h& kwere subsequently repriced and placed. In the fall, there will be more deals.
- l; T$ e( m2 `% G Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 E/ Y" _2 ~( c5 t
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were M6 ]1 S" b) M' z/ p
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for) p9 ^/ w5 t+ |% k' z
bankruptcy, they already have debt financing in place.9 n- H0 P J$ x. b
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 p3 T0 J+ B8 e rtoday.
R; G. Q+ l/ R, z) h Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in3 q, Z! t% Z3 e/ b
emerging markets have no problem with funding. |
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