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发表于 2011-9-17 13:16
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Current situation; K7 Y& I$ r% `
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: a4 }) {" N W9 j f
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
) o+ _. ^- V$ c# Q# R. D4 {impose liquidation values.
" b/ f% b& W4 W& O* k0 Y In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
4 @1 v l+ k- N( I2 lAugust, we said a credit shutdown was unlikely – we continue to hold that view.4 X% [3 R+ B$ r1 m4 [
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
9 e* L4 {( K# ? B3 W& gscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
$ b/ _5 l" b3 O/ Q# I k! v+ \5 ` Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
$ b% L$ ?0 {4 s; K* M4 wSeptember. Non-financial investment grade is the new safe haven.
* m" f$ V; o/ m) r+ W High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
0 G& p9 F, I0 ]) @% h$ S+ ]then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
3 E0 U' \9 d- Qbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
% J1 S! @! C* ~' d/ d5 Y- r' laccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade9 u! l- L8 Q- e5 X4 P1 A8 o3 L/ J
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are* [$ \9 z& r/ L$ G8 h% N7 B- {4 L
positive for the year-do-date, including high yield.
# I! U0 k3 H+ _0 z Mortgages – There is no funding for new construction, but existing quality properties are having no trouble7 N5 ^9 W d" _: s! ^) E& l
finding financing.
6 |7 O8 h8 Y; ?% k; V }" Z Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
' O7 K9 Q7 U: T2 _! v$ Fwere subsequently repriced and placed. In the fall, there will be more deals.
1 t8 C7 x/ t6 e4 ~8 u3 e Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! n7 y1 p9 i! D& N# Z
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were* O* b0 s( V ]# w4 c- H( D
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
4 W ]1 \# X3 u4 A" f; d# y, Fbankruptcy, they already have debt financing in place.
( f8 |! S- r6 ^) ~" p European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 j, K. s6 G& F$ A- V
today.7 P- _: ~. y( F$ s
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in, z3 E2 e* d2 |( f: ~( m" E% u: C
emerging markets have no problem with funding. |
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