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发表于 2011-9-17 13:16
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Current situation
* n* M$ p$ ~; k9 z* J0 c The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long7 W, v4 N1 C& @6 u, l2 ]! A; e
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. `8 x7 e& E6 U: F) f+ [4 z
impose liquidation values.- O1 b4 @/ u0 ~& L$ ^
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In, ^& A9 C9 ~: O% r
August, we said a credit shutdown was unlikely – we continue to hold that view.
2 `' v3 g: }' U) u+ l The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
* i% |8 K+ H3 _! S$ K; U$ `scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
- `9 R$ p' g% B; B3 r* M4 x' m! \, ?/ z+ c( n
A look at credit markets0 Z% L' ]' W; d1 v9 X* R
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
/ G7 S s$ v" f) M. ^8 C& _3 J& zSeptember. Non-financial investment grade is the new safe haven.
7 c: K, O( I2 [9 X5 _) i/ z; j9 b7 [ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%9 t' ~+ R# Q: f! S! V
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1; u7 ^4 [; N! h P' |
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
5 r7 j! N& w6 D0 Vaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ [1 t r1 R/ d7 g5 ?0 w# w
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
0 L! C$ c7 V! |+ c, Ypositive for the year-do-date, including high yield.3 R- f+ d u5 u( \: l8 L& c1 U9 }' @) }
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble* i% C( G/ z; v4 Y& l
finding financing." Y" i: N3 `1 S/ m5 C. L9 Q1 G
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they2 E) s9 {* J4 z0 S" [: L) @: m
were subsequently repriced and placed. In the fall, there will be more deals.
2 q6 g7 G5 o a7 H. T. `; H Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
" v4 V8 D! R! z: _( w) lis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were- o8 E, F/ ^ ]& E* [7 K
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for) f, N: t- ]( h o9 b" A9 }
bankruptcy, they already have debt financing in place.- H0 y/ z$ u% X$ x9 H E; |" H* }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
7 | _( _0 x* Y7 Ftoday.- M/ Q3 E+ ]4 g# ]. T
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
6 D' o; c1 _$ R0 \. i% kemerging markets have no problem with funding. |
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