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发表于 2011-9-17 13:16
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Current situation9 z" c% u4 Z6 F) U1 |6 l* K4 t- d) d
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
# @. K3 A* Z0 W9 s! X$ r+ oas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may+ z) p) H- F5 h! T2 B z5 O1 g
impose liquidation values.
) U$ c8 [5 K! T& Z* b% a- a In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
6 b/ ~( f0 w, R0 w; DAugust, we said a credit shutdown was unlikely – we continue to hold that view.
9 }8 W* F4 d0 P- ] The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension" M7 V6 s6 f d5 y. [8 L
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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8 c! z7 D5 [! l! j2 J0 V6 ]4 q; XA look at credit markets5 n# O* S/ B/ X) Q3 t
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in) V' B% L9 v3 `5 x6 a$ N6 N9 o
September. Non-financial investment grade is the new safe haven.
5 h* h+ G0 ~: M# a. K High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
9 s$ c; o: u1 C' Dthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $12 Y" i6 A4 X5 R* I% }1 |8 S l
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have- E4 u& W8 l0 t, u) d8 Y8 l
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade0 D% f' _) Q. h0 P2 E8 H( L
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
# d) {8 }! E, X3 ~ ^positive for the year-do-date, including high yield.
, G4 w1 d7 l& D7 }$ M z Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
. E, P- i' @' q8 I+ L z8 \finding financing.
4 C6 V% i! e. I- r/ G- a4 H* c Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they% v" ^7 V2 B- m5 {, ^- j
were subsequently repriced and placed. In the fall, there will be more deals.
" J- d) Q4 d7 Z Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 \' y! d0 q( A' m# ?0 zis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were) c# V* C' S4 Y5 q& v
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
: \9 r/ d- z5 ]4 B) l/ cbankruptcy, they already have debt financing in place.
: T! d2 \9 w' [ European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
" y/ f1 g: F9 y; e! x J7 {today.
7 R) g5 @) _0 P1 d2 n Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# u% |5 p; ?$ a- j; u
emerging markets have no problem with funding. |
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