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发表于 2011-9-17 13:16
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Current situation
1 z$ w& N3 o9 @5 }5 d0 Q The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
; I& e) M: u) c% f* V. {6 Fas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
4 }" l$ i( X4 H" L% |# ~3 s& Eimpose liquidation values.
" F" I: ~. `1 E# [* y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
2 Z3 I$ t/ V6 C0 _- f7 C5 {August, we said a credit shutdown was unlikely – we continue to hold that view.5 d& Y$ h( O) V+ d h. A
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension D0 Y3 C& H/ ~5 P
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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- `1 V0 c. u+ w8 G4 p8 fA look at credit markets
% ~ s. l$ J. y' X5 l Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in+ X H( C5 E( s7 a" i; S
September. Non-financial investment grade is the new safe haven.# q, j: J! f( e) Q
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 p' o0 \) L' \- O: b
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $13 Z$ x/ X( q. }
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
) L) A% v5 s1 J% zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade& m, k6 R) U$ M; _
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are4 n& a) C7 K0 v. u
positive for the year-do-date, including high yield.
+ h8 U% E1 u6 {' _2 q Mortgages – There is no funding for new construction, but existing quality properties are having no trouble/ J% g" T+ P. X* V/ d
finding financing." t; B, X N. j, a
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they/ ?2 {; V9 a; Y9 q
were subsequently repriced and placed. In the fall, there will be more deals.* l7 o+ n" m9 i% ?, v% {# K
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
' i5 L6 g1 S% L" O, |is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were8 I' N4 b7 E5 {$ i8 t) x3 I; [
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for7 ?: F+ x" F0 C/ D
bankruptcy, they already have debt financing in place.
; \$ [3 `% a; S* y6 ] European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
. n3 n6 M" \' D5 U2 wtoday.; f' ~1 g/ w0 b4 R1 \4 ^" \, e% L$ n7 B
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 V& l7 W3 H- O& u x& eemerging markets have no problem with funding. |
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