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发表于 2011-9-17 13:16
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Current situation
& @1 Z' x" J' \( ~ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
, _% k: Q- i# G) pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may7 `# e- F- M, j) E) ]8 Y
impose liquidation values.1 E/ ?7 B5 `) Y
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In# Y4 c% O& S! t" E& I. n
August, we said a credit shutdown was unlikely – we continue to hold that view./ R) R" c: B1 O; c: s9 g
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' V3 O. B1 b4 g9 q" C) _
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.$ I- x) b) J; m% O
% W7 c' L' Q& d9 Q/ N! vA look at credit markets
+ G9 F+ Y" _% a0 r% Y% S) Q# n& k Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in6 Q* G. Y. j6 C- c
September. Non-financial investment grade is the new safe haven.# p. j m+ o, [' M: {! i
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
* U1 i; D6 V; ~then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
9 R7 |/ I% t; I# C) K5 `5 b3 pbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have; O$ c, b6 a% i' N+ A1 M8 d
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade! t: a: t! B) V& ^, S; _, Z& @
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
# G: r6 J2 ]& m) ~8 F8 gpositive for the year-do-date, including high yield.5 F5 |% ~& ?7 ?. D
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble! z: X' F7 K3 D7 g5 Q, a$ i! t
finding financing.: O2 N! @9 w D4 W0 w
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they" U) R2 B! a7 o1 y
were subsequently repriced and placed. In the fall, there will be more deals.8 \9 B% c* @5 e* ~
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
3 ]7 l* n$ q U; cis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were, X4 F0 P' X9 [: k# a0 r O. b
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
# I- W o& D: C* P. bbankruptcy, they already have debt financing in place.
3 M) P0 [: W* |9 B- N5 k7 a: y$ Z- t European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain/ a- Z2 |0 L/ ~/ W
today.; ^6 N# }' U0 H
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in9 U5 }4 ~# I& `5 x
emerging markets have no problem with funding. |
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