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发表于 2011-9-17 13:16
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Current situation
! ?) E( \; u9 ?$ V The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 U/ u0 L k6 A" Pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may d" a% r8 T9 @+ w2 l$ m" \$ Y
impose liquidation values.
; L8 i, E# ~& ] In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
% R, L; \9 ]' g4 d5 b0 K* `August, we said a credit shutdown was unlikely – we continue to hold that view.
/ U! s* t- S0 P The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension! `. Y. W( U% @
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.+ W0 l$ ]/ H# F# Y7 W K0 p% \
& ?6 a4 ]) h" r" t% W' `
A look at credit markets
) T* B. b! z9 j3 D1 o4 R' |+ j5 K Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
/ S% K. I6 g% _ M" g6 ^2 fSeptember. Non-financial investment grade is the new safe haven.5 X8 @) W4 U. x! X7 s
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%0 `( V0 A, i% J" u; K! B/ o) U
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ `9 H& q7 [+ }, I: [4 Jbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
2 [ c+ G, B! {, u4 `* Z7 Aaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) I/ m6 I& @1 H4 n0 p0 A4 L# Q
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
- d# N+ Q. ?% ?2 C3 m8 [& Jpositive for the year-do-date, including high yield.
0 S) g/ V. m5 f3 K+ w8 q4 [ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble, c# Z( J! {! [% s
finding financing.
$ Q2 p3 ^% U2 x/ e' f4 F Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
7 [' K& P; X. D# ]" D a5 q4 Jwere subsequently repriced and placed. In the fall, there will be more deals.; j% ]3 g, P ^6 Q; X# m) V
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and: g2 G6 U( M) \' S2 V# B
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were% P1 C3 Q6 R' z/ {) A8 M2 S
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for4 g) {( d; R9 l+ _! R# E5 J
bankruptcy, they already have debt financing in place.
9 B) T6 g; K& E8 c5 q. w. r European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
8 j8 @& S4 s5 Gtoday.& c! j3 G) p" A5 m" R5 R9 l; s" i
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in, I1 S( | h& u! i" S
emerging markets have no problem with funding. |
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