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发表于 2011-9-17 13:16
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Current situation
6 r2 U- H" k1 \) `8 {9 D The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long }5 i* h* d: L% R4 g
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may' F) N* C6 @) a
impose liquidation values.
. i* A* o9 n$ k7 I' R$ o In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
* _' L( U- E& E( oAugust, we said a credit shutdown was unlikely – we continue to hold that view.! Y% s y' S/ J+ M! c K2 k& {# Z4 x
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. H a! ?, S: V9 x* sscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
8 n6 W) W; b+ Y; U4 f |8 [! }% r) B9 [
A look at credit markets
4 l: x! P: m6 \- C Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 ^4 g: _$ n; ^7 ~: h" j/ H
September. Non-financial investment grade is the new safe haven.
l9 ]+ ~' X+ C* D: A1 R High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
& P/ g& x" }5 u# }0 o$ Mthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1$ V8 W8 Z6 O6 l) n! G
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' y' L+ n+ p- P! | |) \# y$ taccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
( a- e! @% J* l" ~. e0 Q9 mCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 f# ]- u2 V5 J1 S2 A
positive for the year-do-date, including high yield.
4 J+ o& O4 Y! I Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
3 P* S* r& ^- j( Jfinding financing.
$ S% K. W6 z2 x0 H7 E5 T. o2 N Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ W, |# X) x0 n# N; M7 M$ gwere subsequently repriced and placed. In the fall, there will be more deals.% Y6 J9 a7 |0 }
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and6 J/ Y- X, l& i2 F: u( ?0 v. f6 C
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' l9 p4 O8 ]4 c" H* c
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for4 {2 J/ @' Q1 h& H. s4 Q$ T S
bankruptcy, they already have debt financing in place.
. A# Z% g; ?2 X. ?) p! p European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
4 H" d- Q2 O. W8 m- ?( atoday.
" h9 z# g3 v( Y Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 p) X- M0 \7 ^! c2 d8 Iemerging markets have no problem with funding. |
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