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发表于 2011-9-17 13:16
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Current situation/ N2 t& _$ l( ^0 }. F2 C
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
$ p, H, J2 _' j: L7 was funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may. @% o0 P9 b/ e, z, }, b
impose liquidation values.
9 z0 C( u% \8 {1 B. W In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In2 }6 E" g! H3 _' p1 |
August, we said a credit shutdown was unlikely – we continue to hold that view.
2 t& E& O3 P% k! q The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
2 R5 }- |2 h! U) f, }9 Ascrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets3 J$ u! N6 n+ s: R2 k! A) S
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in$ R* k& I* j0 O. m% X6 U7 G9 h- P+ q9 k3 u
September. Non-financial investment grade is the new safe haven.
! d$ k& i# x2 W' p# o High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
6 m7 I) o, `" Z/ v% ?then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 @7 q+ t# x1 \. J0 }) C% obillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have8 ?, F) Y; L$ D$ ?5 q) W; Y. s
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
0 S8 U1 }/ u' a+ J; O7 K z; [' p" qCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
, s8 e5 r) M4 y* hpositive for the year-do-date, including high yield.
; t0 \& I6 U' n- T6 |- g Mortgages – There is no funding for new construction, but existing quality properties are having no trouble: e9 }- H$ z3 ^# ]+ y
finding financing.3 V* H+ H& ^5 j- e
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they( U B3 x. O4 j" `' h# @
were subsequently repriced and placed. In the fall, there will be more deals.3 d7 M: t* v* e4 G- L: @* U
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and" F; c" g, h( l1 O Y9 @
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were: r$ Q F5 w* S2 ]+ ^
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
( S- G I! p6 y( I+ d9 j& [bankruptcy, they already have debt financing in place.
3 N, {0 H' u5 f- |/ I' m; q( F7 U European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain# s9 Y1 l9 f% E. L$ H: r: P
today.
! V9 j4 U# t$ q* z& p Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in+ [6 S* z' Z. V, Y" X! N
emerging markets have no problem with funding. |
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