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发表于 2011-9-17 13:16
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Current situation
+ ]" f* H% n/ p) g6 H c. F The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
0 S+ g' d- j: K& ~# Gas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
( G7 G# f. w2 V% M# b* F( ~impose liquidation values./ }* z( u! `/ p1 G# c* c
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In& m( Z) o, B! w% J( {" V) a
August, we said a credit shutdown was unlikely – we continue to hold that view.; T5 E& s2 h, ?0 w ~" Z4 ~, G4 U
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 }0 a" Q" D: O$ C4 D- ?1 d' p5 g' {4 R
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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: O/ ~+ L! ~ }7 N: r2 t$ T8 jA look at credit markets
2 `/ S8 g# \4 l8 ]- m' E Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: O1 x+ d, w+ X, _. N; [September. Non-financial investment grade is the new safe haven.
5 P; G. o! w8 `8 {5 e1 l3 @ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%2 n1 n& p7 X# c- R9 K7 Y
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
9 W$ {& M7 x K0 ?# A- c& \billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
$ r% ~- D5 s/ H3 h( E# l( c7 Xaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 m7 x9 U+ S* ~6 M4 F+ v
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are8 c C0 c; Q; j( Z
positive for the year-do-date, including high yield.
1 Q9 ~- z: q O' h Mortgages – There is no funding for new construction, but existing quality properties are having no trouble7 ^( K& H& l8 H" \1 j0 N w
finding financing.
/ C! j) ?9 u( A7 l1 S% G Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- U" A/ c9 B- {& Q7 k& B
were subsequently repriced and placed. In the fall, there will be more deals.$ @( Y, v" r5 B. k( ~2 ^& K' y7 p
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
, d2 [" f2 F% X) P- g3 q1 W" bis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( b* C6 @# E- I* `0 K# M
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for( W" K' e$ X" O. b, [: l8 g( K
bankruptcy, they already have debt financing in place.
. k3 e% [: j* `, `: P European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
! G5 R, {# H* }/ utoday.
! ^' O7 N# w" z0 y; v+ G' b, t Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
+ l$ X6 B) X, x" g7 `# Eemerging markets have no problem with funding. |
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