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发表于 2011-9-17 13:16
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Current situation/ c) m* ]) O( g& p9 A. x; A+ n
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
" ?% } U* G0 z: c& {- Bas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may6 |+ \' U8 T% S6 ]9 L$ o: g* x
impose liquidation values.. r% p: Q& U1 S
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In# p$ i& [- P4 K& s
August, we said a credit shutdown was unlikely – we continue to hold that view.; J1 s$ }! l* b! j' x( q! T4 w
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
6 D& X* C& e: F, Cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets- O2 B# ~, R9 v( }4 J* u% K% n" Z4 G
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
! G! d; M1 O0 K8 r1 J# r% p1 N* ]September. Non-financial investment grade is the new safe haven.- ^, q# Q# l- [# l7 F; b
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%6 V E- ?: @. ^& N( m5 q9 ~
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
7 @, i* B7 H, U& N4 G8 }- tbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
m2 ~/ }2 {! O0 laccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
, o( Q- e1 o4 S% }CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
+ l$ m: j+ S/ J. B% ?positive for the year-do-date, including high yield./ F' u5 B' e( Q2 c$ ^
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# h) L# _+ Q4 ]' V. l1 X
finding financing.% x0 f, q( f" f" ^3 d; H
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they5 }9 q6 D2 f" y5 f; ]: R* h
were subsequently repriced and placed. In the fall, there will be more deals.
3 w9 V! x" k9 o1 Q( V; R Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
( k* l3 z* [: w }! d9 xis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were3 {' v/ D' V( {
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for0 X5 z* j. j1 }- I2 j. z2 k5 c
bankruptcy, they already have debt financing in place.
; E$ O: ~4 H& @0 d) v European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain5 f0 n$ Z# X0 P7 ]. \# o7 o- k: f
today.6 l3 u/ B2 \& u: H" J& S
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in& t( Z! S4 h( r9 t
emerging markets have no problem with funding. |
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