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发表于 2011-9-17 13:16
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Current situation
% C4 t* g! G' k' [ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long v1 @1 I, S3 D( f9 I
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may2 c j! G) d9 o" T' f# E& ~
impose liquidation values.
4 A( L5 e8 {) j* f: O+ R In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
( T( L& R3 z( E x1 d( V( uAugust, we said a credit shutdown was unlikely – we continue to hold that view.
/ @. ?$ R" ^% c" X; L* h The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
$ C3 l3 q1 a* o% M3 Z- }$ }- ]scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.0 }5 {1 w, C. f5 S0 Z
8 c2 \0 W9 b3 A
A look at credit markets5 `1 ?, k D& D w K
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
- P, d' U+ \# r* B0 i7 ]September. Non-financial investment grade is the new safe haven.% z) N1 x) R6 r( r" w: N: b6 f1 A, l
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! R3 L0 d* ^# A! Dthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1) c" n0 f, Q$ \: w% u( z
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' B( }; y$ m/ q- zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
6 g$ Y& ~8 A) w' [$ w2 x/ V! \' ICCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
) J Z- @& t8 Cpositive for the year-do-date, including high yield.: f B1 V+ w; q7 G6 T$ s) K2 J! o: F- M, p
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
; ?, V) H* P3 c$ ofinding financing.
6 |9 z; x: i$ u$ K Y/ n, @2 E Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they" }2 r9 {9 }9 P% U) C* O
were subsequently repriced and placed. In the fall, there will be more deals.+ i; p" }+ Q6 ]3 e- G: H0 z
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
) \! |/ [! N9 ais now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
K, g, H! R6 |# m& r7 V+ ~" @- u% pgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
- L5 M2 S3 ~ h: d- bbankruptcy, they already have debt financing in place.
% Q+ J: o8 A; o- m# o) U8 ` European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
8 k+ h8 Q% a" L; Htoday.
. z; e( V+ C$ h% q2 y! G Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in7 t# g) Q2 c: t# E# a" V7 W
emerging markets have no problem with funding. |
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