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发表于 2011-9-17 13:16
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Current situation! m0 g7 S0 b4 n3 ~. S, d
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
% |4 ^; f1 ~9 k" fas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
4 E' q0 H- S% |/ a! H# ^9 U/ {impose liquidation values.
' N. i. N) _; @/ K3 f. L In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
- O6 _) }: ~6 U( k& v8 t, R) RAugust, we said a credit shutdown was unlikely – we continue to hold that view.
2 s/ F; T5 ~) `' ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension9 @$ T* K) y7 j. }) u
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
& x! W. \$ X/ @
" C3 M2 S$ b' |4 DA look at credit markets
p9 O1 N& L% p$ N% u# z Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in9 e* ` l+ _1 N: {6 Q2 a% c: w
September. Non-financial investment grade is the new safe haven.
2 G' z5 S' ?" W0 x# s+ v& n% l High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
& }. {" @' T. d1 c) Qthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
+ i! a3 \, Z7 U5 H# t2 Ybillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
$ K# t0 Y: f+ {, |4 J, f( Faccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
8 x0 D. T( L. p4 c0 t' e' Z5 wCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are4 u6 v$ k4 ~0 o t" S! X# O
positive for the year-do-date, including high yield.& F! H* T; b* `+ R2 Y' S
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
/ W# ]9 ~9 Q4 G/ w8 Wfinding financing.
6 {. H! L) g6 y6 O" O) Q* R Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
) O, M) _( _: d' h6 ]* rwere subsequently repriced and placed. In the fall, there will be more deals.* m" i% x+ |; \, _9 q
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
- l& l1 J8 l8 Pis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% u; r6 v9 E2 h% Bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
) n7 u/ f% D2 w1 t1 `3 Jbankruptcy, they already have debt financing in place.; Q( l1 J) z9 s4 m' o% L9 A. |9 @6 R
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain9 x) p( ` \& _: c
today.
2 L% Q/ D8 R2 N; _4 p2 j Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
' u4 p/ q6 C7 I9 S6 nemerging markets have no problem with funding. |
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