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发表于 2011-9-17 13:16
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Current situation
1 Y# E( K' W$ m* H' O The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
3 x9 u7 i5 w V7 {( _! M; `/ Ias funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may8 B* N1 G9 z1 y2 {8 F8 ^
impose liquidation values.
; C" j( Y. n+ V In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ d8 P! m M9 oAugust, we said a credit shutdown was unlikely – we continue to hold that view.
z7 s X9 t& F( ^ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 o8 \, [! t* }' |! xscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets. U5 \' U# M& P: l2 `
& d3 W0 q9 z! A( \A look at credit markets* v% q' n( s% \# j
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# b3 y5 U! o& { J& p$ uSeptember. Non-financial investment grade is the new safe haven.9 Q4 W6 a0 Z- }( _' G! u" \
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
& Y* J/ `' x+ @! p; }then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
0 ?1 |( }" h- x2 M# Cbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have" r# F6 N y- h/ Z* @% ^3 l1 d* w
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade+ Y' H) B2 q# f' J
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are/ x/ a) n# r6 A" q" L# U( ~% k
positive for the year-do-date, including high yield.
$ _) y% K+ `; z' V4 C! A$ T Mortgages – There is no funding for new construction, but existing quality properties are having no trouble- G( F& N" d$ m5 k2 H/ Y' r
finding financing.' ^; M% e6 m8 i2 t% q
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
2 z7 P g( Z- O0 nwere subsequently repriced and placed. In the fall, there will be more deals.
/ z/ H8 Y% V6 P- x5 Z. t# V# d Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
: p4 U/ Q5 O. t8 Y# Y2 xis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
% m4 g! N6 Z! Y* S+ {6 p5 f, ^) h$ Mgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
& ?9 Q$ G \ J1 Gbankruptcy, they already have debt financing in place.2 F5 H% r& q T5 M7 ?! k+ R" ?$ f
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain6 w2 Q8 Y( Y8 F( I2 h s
today." q" p, A0 `- c9 {/ H
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
: Q+ Z" ~# H; Y% k7 J; q- V( ?emerging markets have no problem with funding. |
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