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发表于 2011-9-17 13:16
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Current situation
% E. n& }2 N l% O+ U1 d The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
! V3 E$ V* R U2 Jas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
& R7 P2 }8 q+ d8 ^" P2 U& ~% Eimpose liquidation values.
8 B1 P" l( r+ u( Q5 P! F In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In: Z: n% Y* Y# `. l- y4 f2 e
August, we said a credit shutdown was unlikely – we continue to hold that view.
9 K, g( b a) D3 L- M The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
. e- C9 H5 F4 y6 Dscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.+ f% V- Z" H; R6 z4 D/ u/ `
& U$ K* q0 [. N. rA look at credit markets
1 _$ \* t2 m3 m' M2 Y6 y4 y) d/ { Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in9 ?- l2 v) t9 x: _
September. Non-financial investment grade is the new safe haven.- N% V8 R9 f8 K
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
7 r0 s: K m) y/ fthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1' b0 r2 z9 z# [
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( l/ H2 F, x1 L
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- @1 ?( U, _& U- \5 U& ?0 O8 eCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are" n+ }; g U0 o7 g& r! B
positive for the year-do-date, including high yield.
3 H# t% I6 {7 S1 Z7 G8 e% ^/ q Mortgages – There is no funding for new construction, but existing quality properties are having no trouble0 d0 l# @6 I9 L; P# t' D E4 V
finding financing.1 M' P( B1 {& s
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they6 o, K! G) u/ J. t3 p( U
were subsequently repriced and placed. In the fall, there will be more deals.) L% {* t3 `' Y5 O. i
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
3 q" q/ {! u0 mis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were3 M, J8 W( }/ M
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for; D5 r) _( N/ k7 r, K4 i8 `
bankruptcy, they already have debt financing in place.
7 b$ Z% a% B) T9 W; v4 _; x0 f European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain8 A! b$ w8 w5 f* S: Z4 W6 _
today.
. @9 A- ~! V y' R2 f3 z q Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in; c- M+ B6 j# r# } k+ w2 m
emerging markets have no problem with funding. |
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