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发表于 2011-9-17 13:16
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Current situation
) Z0 j; E8 r& a* X; u$ \ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! X, O) z; p" t1 B1 Q& d. H0 r, m
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
- c& ?7 }" A- v D, F7 |) s" Z* l- x" aimpose liquidation values.: m9 H, G8 n; H( b
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
: L. H. W! p) k) Z; }3 x8 dAugust, we said a credit shutdown was unlikely – we continue to hold that view.% ^# n& f' J# |7 K3 ?8 T
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; R3 x; M% Q) Y% r" M& q3 ~- `
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.2 ?: C3 Z9 c+ ^/ ~2 M9 s1 f
, c) _/ N; P# k, yA look at credit markets+ z* l1 s+ h( Z' `* Y# T
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in9 v3 B: y8 w& { H, |& f( \0 Q8 e
September. Non-financial investment grade is the new safe haven.
, Z3 }7 X+ K! X" U) ?! A# R! K High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
, j" m! f8 s$ ~1 c$ athen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
4 R% _# R: W4 K) G1 H j$ y* y: X: x! Wbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
5 v* r" h# G. I; j6 taccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! s( E* D' C" @& N& ^" s
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
* p, ]% D4 F/ X+ Upositive for the year-do-date, including high yield.
% n' M! k* E! W) X- c Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( F. L+ v" p5 y( r& r8 w' @) sfinding financing.- v* p/ G* n. @
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 J' K; F' g$ Mwere subsequently repriced and placed. In the fall, there will be more deals.8 f7 z% X8 X/ Q& W
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and0 c% |, o% P) p2 B
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 Y! ?* P! ]9 s! Q1 [, J/ jgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for# x+ F! T) M; x& y4 n7 L
bankruptcy, they already have debt financing in place.
5 C* L; Q8 Q) i* D European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
) ~' O+ T6 o! z) m4 Q! ^today.; V, Z, ?# h9 B& w; n0 @
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in9 @- ~. _+ k8 {0 |
emerging markets have no problem with funding. |
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