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发表于 2011-9-17 13:16
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Current situation
! r7 ^- k% S$ z) h* s0 ~ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: A: U+ W; ?. u+ k
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
/ F& {8 j' O2 r) i. B. P( [& Pimpose liquidation values.1 [# b g, W; D9 w K
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* R/ _7 L4 y+ Y$ y( U0 aAugust, we said a credit shutdown was unlikely – we continue to hold that view.; c' ]! z1 W; ~
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. T% K) ~9 e) L& `
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.5 A m* j8 F. c" e3 c& `
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A look at credit markets! k4 ~2 P. U- \7 {7 }( W' f! l. U
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 q% P8 Z0 t6 @6 z2 @) H: J( }September. Non-financial investment grade is the new safe haven.
6 C( R* i- L/ V9 W High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
7 L3 u* L- t- J9 T o1 Cthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $16 E8 M+ Q$ S) P
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
" q" O- ~9 ^3 w, F8 m: l5 paccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 g8 X% t$ h' {; a0 @+ tCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 H' ?- F6 D3 g; b0 k
positive for the year-do-date, including high yield./ a0 a9 p S) o6 I
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
R6 O- ?& [9 e/ @finding financing.
/ _1 J! u3 i' [2 _6 j Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they9 _& ^) s$ O" N' o) |3 i; `
were subsequently repriced and placed. In the fall, there will be more deals.
& y/ \0 n2 ?1 e# a+ ^* I4 O Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
( _& W' b9 s0 d0 j2 E( gis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were7 K5 d5 `2 B" ~; Z& @- K4 z; D
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for. Q5 F% [& U8 v, R4 Z6 Z
bankruptcy, they already have debt financing in place.
z; z- e" K4 W' S; P) x European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
% ^5 L" u9 E( ~4 }8 Ktoday.! z- m& X, [6 e% b, @! c7 `
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ u3 s8 q A0 g& ^
emerging markets have no problem with funding. |
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