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发表于 2011-9-17 13:16
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Current situation
8 G7 A' I! @6 d1 j/ z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
, s5 n) F+ C: e' \1 ras funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
7 Z: w3 d, }: K! N- S0 yimpose liquidation values.: `5 h% H9 ?0 g& z. Z3 O& X5 w
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
- F4 |, Z- ]8 o8 G2 JAugust, we said a credit shutdown was unlikely – we continue to hold that view.
* ]5 ^& P+ K4 P. h. S/ A The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension$ g+ `) p% n7 y0 ~
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.* o7 e5 H, J( ]' V/ M' D! D* z' l
& w' q$ N& z" K# q/ `
A look at credit markets
" t( p$ S, \- ]5 E% F+ @ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
" A( E* B) k. T) ISeptember. Non-financial investment grade is the new safe haven.6 p: t1 `0 n8 l! a z
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
; C& M- g( c" x; _then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1. s: n; s- |# _* ?2 G
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have) G' d. Z/ c: c v+ r
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade7 q! n9 I( v" A! C" ?- P
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 p5 Z% B& a- l& }% K# Z( Ppositive for the year-do-date, including high yield.
z4 G4 G' g% \& M# S Mortgages – There is no funding for new construction, but existing quality properties are having no trouble" p9 o3 g2 F0 e/ s
finding financing.7 e3 }, S/ J7 Z" o- J' F2 G
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they- ]: b0 d/ M! I) a! u3 Q7 @" c/ U
were subsequently repriced and placed. In the fall, there will be more deals.2 h9 V7 d+ ^* Z- O. X i* _& k/ i( {7 K
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and S0 g6 C! u0 f& n" i, g# w
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
/ u# c$ [' \+ t" U3 f8 C, ngoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for0 }9 l5 N* r1 e. c
bankruptcy, they already have debt financing in place.# i( ~' B" ]% R8 l1 j5 _
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 l. F7 z1 |) ]4 Qtoday.
3 I0 q' y1 I! {3 t, a3 R Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in# X5 u# o6 Q0 ^% B; g7 a m
emerging markets have no problem with funding. |
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