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发表于 2011-9-17 13:16
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Current situation
7 U3 m" o$ P4 o- \ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
+ D+ |7 i; o' Qas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 ^/ J. S' A$ l$ }3 @impose liquidation values." T' l! W8 P7 o- }
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
+ `3 a+ B" ]+ \* x2 SAugust, we said a credit shutdown was unlikely – we continue to hold that view.
2 o) ?% u0 E* U2 f, ? The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. A7 P" j: r r+ ]8 z0 L# P. Oscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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, M( R9 S1 q4 S" vA look at credit markets& h+ A. \$ n' {8 w
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in. M. T: w, N4 R5 m% m
September. Non-financial investment grade is the new safe haven.
2 I j: T/ t* Z/ s/ ?' g High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7% S% B5 h" y2 B$ _# v5 C; f
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1+ S1 d) i( C) u9 `
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
0 m6 i6 K& \+ Y" j. x5 {access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
2 V: R V! M, x7 a" u, W6 ]CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
, X" M+ w6 T$ U2 f' u: t( Y) l0 [2 hpositive for the year-do-date, including high yield." J2 a7 A2 F' ?
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
9 l: {9 H5 Z1 k R" k" F" Gfinding financing.+ g1 m9 ] h# n& l
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they: {. K2 t' s/ V9 K
were subsequently repriced and placed. In the fall, there will be more deals.
7 q2 `" _* g- L6 y- n4 p1 H Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and: b7 U8 M" b* a
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( P- k0 i8 h- \% Z# `" @
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
5 S9 L/ z# k" y9 U5 k8 p. ubankruptcy, they already have debt financing in place.
, s0 h* e O' C$ z; q European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in% A' K5 L* p/ ]: l2 P) h& v5 z) y
emerging markets have no problem with funding. |
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