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发表于 2011-9-17 13:16
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Current situation
% n; B" U0 t+ H: m The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long- t' g9 V7 x0 `2 K
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
, T0 j" w: H# N0 B# wimpose liquidation values.
6 m$ O* {9 E2 D! N1 n5 v In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In# W& ` x& e' M, b% Y0 d
August, we said a credit shutdown was unlikely – we continue to hold that view.; f6 z3 j! [/ m0 p, Z
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
9 T' q d: A* O- j% h4 G6 Rscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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4 o6 k. v/ M# ` ^: }A look at credit markets- N+ y' W; h" ?2 w
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in P+ N# w8 T% K4 N. y" }. x2 k# u
September. Non-financial investment grade is the new safe haven.8 {, ^, Q; C( o" H
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
# a' ?1 b! h: L6 r6 k Ythen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
- l: I+ w) }3 |: l, c5 A7 Sbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
0 Z; e: u. k4 M: t m5 l' iaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 p' [" d' z QCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are" p# k7 S# E' L9 S, T6 B3 b' G
positive for the year-do-date, including high yield.
. P# ?$ \. M9 w" m+ z( h' R Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ L+ F- T2 B' S* v9 t6 t Ffinding financing.
7 u0 L8 F7 q9 D% d, Z Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
; b3 `2 n0 T7 r& C% y( C6 [6 {were subsequently repriced and placed. In the fall, there will be more deals.
; B7 N+ ]! B7 f4 G* {5 v2 b Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and- O, ~$ Q) L$ s
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# m% N& {# ?2 Y% G
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
1 F$ |0 C& }, @bankruptcy, they already have debt financing in place.1 X4 ]$ o; l& ^3 j3 ~2 B1 I# t# G0 f
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
, Y; N4 }) z6 m" Ktoday.( H' C2 {6 A1 `0 P# i9 h* a8 Z# f6 S
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
0 S0 n& b& `0 A; |( q( D0 Cemerging markets have no problem with funding. |
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