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发表于 2011-9-17 13:16
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Current situation
0 N/ w+ A/ c5 k& U- j3 d8 q$ q The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
4 L u3 r0 x2 l2 s' v9 pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may B; |+ p: Q/ k" c H# [
impose liquidation values., ?/ Z* y" ?; z/ x/ ^) S1 _
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In" F* C5 H, f# [& S. Y, R/ Q
August, we said a credit shutdown was unlikely – we continue to hold that view.6 D- C3 N0 Q) o) N0 m4 b
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension; I4 \" E+ T$ F. O7 N
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
# h E2 G" ]( U5 e M f
9 G3 C* J# S# M) fA look at credit markets- H/ I4 r8 q) q. k
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in3 C" ?% P( b3 u
September. Non-financial investment grade is the new safe haven." |: l5 `# ~: {+ w- m# }+ Q/ n
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
* O8 E' A1 H* M5 i2 G& Mthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $18 c; k! I! k, d" c4 i
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* e3 N q( o e" H3 S ~access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade# C! O5 ^5 t( k/ N
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are9 O' P; f0 ?7 b H3 j
positive for the year-do-date, including high yield., u+ ?2 y- j5 b$ X& {0 S* p/ d
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ K C! {* I" u& F( Ifinding financing.
3 b7 D* `0 r f/ m1 K, \7 w( U Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
$ i& c1 t i: P8 [& s2 |( ^0 \were subsequently repriced and placed. In the fall, there will be more deals.
3 @, z) [ ~9 u( D, O% e Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
$ [; P8 f% W- d& Q- Gis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were2 B* i7 _( H7 U) g
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ D' j' O9 M8 f Y3 S8 s& j1 obankruptcy, they already have debt financing in place.' p2 l; b( c( ~- v5 u, d& Z) e" I
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain8 ?3 s! l; y" G7 G" l h% m& ]& p
today.0 f5 o8 g$ y7 w0 K6 Y
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ ^5 i* c/ `1 A
emerging markets have no problem with funding. |
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