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发表于 2011-9-17 13:16
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Current situation
: g! T, J& Q$ F- v* ^ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long; U8 y- I9 H% _" l! K& a, @2 v
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
$ ~* V+ H1 N* Z& h. J4 A& C6 Nimpose liquidation values.$ U/ F" U' l: j \/ x& D2 e
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
% d }- Z0 ^3 s$ S4 ~! X2 X: @August, we said a credit shutdown was unlikely – we continue to hold that view.
0 }, D5 d/ Y7 u2 o n The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
+ h7 {: R$ C# Y+ Y2 Sscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets) b' o& O. X8 R6 V
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
6 {3 B4 D7 w* ]* A9 p% @September. Non-financial investment grade is the new safe haven.
$ y$ n) G0 a K. k* m1 ~" ? High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%4 E' N( h% s' c2 p2 \7 F# e
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 m! z4 E2 @- R: z9 K
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have u X5 f9 U" G: J c6 e/ }
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- d3 f- U1 }* @8 D3 wCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are, r) J' J @. E# @* I
positive for the year-do-date, including high yield.
! x9 b9 a1 s0 Z4 O Mortgages – There is no funding for new construction, but existing quality properties are having no trouble0 u4 q+ _( Y. v# {4 N/ P
finding financing.7 Z0 c; \/ F4 L4 p0 i( o' A) c+ @
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
7 q: N+ S) G5 F/ {. Lwere subsequently repriced and placed. In the fall, there will be more deals.6 ?/ I6 u9 F! x3 l+ n
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
: a! I% n8 i) H) v# w6 l- \is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were: Z6 }" H9 Q# q. i
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for+ T- j! q% r# d) ^
bankruptcy, they already have debt financing in place.# {6 T7 q4 E9 P2 J1 d; F4 R
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
2 v# b. G4 N6 ]+ T6 {today. b0 s1 o: K: \1 ]( }6 `: v+ r4 d+ F
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
& F% X. F% V( B2 K3 ^% uemerging markets have no problem with funding. |
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