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发表于 2011-9-17 13:16
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Current situation
5 P* ~8 v# t |" O The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
8 U |6 n& {5 C0 I0 cas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
/ {/ P2 \8 t: dimpose liquidation values.
5 d; C- d2 K1 {2 x* e4 U: ]4 M In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In$ @5 E/ [; W1 {3 a: O% d
August, we said a credit shutdown was unlikely – we continue to hold that view., n" c% w4 U0 c' i
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ g- I8 \: }; ^! \8 u8 m8 i6 ^scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.3 S+ s9 ]4 p) @/ a
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A look at credit markets' \1 c: x2 c* o5 P
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
5 B; N6 v9 K2 BSeptember. Non-financial investment grade is the new safe haven.
9 C* N+ ^0 i5 V5 i* [/ f1 ~ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
" |* E% ^5 j# {/ T/ A- ?' Athen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
" t* o* |- ]+ v' E) Y9 S( [billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have: X# ~! L* `! M' G. M& s1 q
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade$ Y0 O* K: ?3 q0 O1 ^3 s% }
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
) [0 b( Y; F4 epositive for the year-do-date, including high yield.
8 G! \% _. R/ L# n1 {5 y Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
l6 e9 v3 ]9 sfinding financing.
5 D& A* B0 n3 [* Q* _! {/ R Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 U8 M n+ `/ T# f: m: B
were subsequently repriced and placed. In the fall, there will be more deals.
" H+ L# m# r3 S: w) X, z& x5 J Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and1 r% }* N3 N1 Y) n7 i u
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
2 b3 I' T5 \' j: h! Ogoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
/ E" i/ r9 @3 {3 k' L2 _bankruptcy, they already have debt financing in place.
. m! U) F7 o: H% U! c0 y European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ w4 ]2 p7 g; n4 t* j
today.
+ n5 O* E' w* K$ y4 A0 E. L9 P Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: H" s. e" l6 V# q9 d2 a/ |4 Z
emerging markets have no problem with funding. |
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