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发表于 2011-9-17 13:16
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Current situation
8 P& r* {0 g* l1 I4 k( `9 I0 t The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long9 M- S+ N/ w0 N+ M3 g/ {& p! f; ?7 ]
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may v5 C! U6 `+ u# f( v( i4 t
impose liquidation values./ u4 j, u9 f* G
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In3 ]* N4 W* Y) u0 E J
August, we said a credit shutdown was unlikely – we continue to hold that view.2 P2 V: ^( c. u2 y" `, X* u1 f
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension+ i6 i' K. u# K/ `
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets- p7 |( _, d! w# a0 i( {+ e
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
& x/ A9 K; E; D1 o1 H9 Z' O! Z2 [/ wSeptember. Non-financial investment grade is the new safe haven.
2 m+ a1 }2 q; \( i; U3 k8 z High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%* _" E8 M6 n7 u* h8 j0 M5 W4 p9 b
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
8 u; y6 k3 G8 {billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
) j5 [) x- g; U8 U3 X2 ^access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade+ `! ?1 j8 [8 n7 F+ e
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
% k* A3 P: c/ O5 Bpositive for the year-do-date, including high yield.
6 s2 ]" T2 W4 D Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
( D( u" r* T' `$ |$ J+ Pfinding financing./ g6 T2 Y( H% ~+ N `+ d. Z
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they/ k6 o8 m K) w) i5 R
were subsequently repriced and placed. In the fall, there will be more deals.
/ W% G' _5 Z* U Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and+ n( f3 m6 t" l* Y
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were/ g( @2 L- y7 b: n
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 N6 u' a) N5 y
bankruptcy, they already have debt financing in place." _3 {: G6 `' i3 ~" k# l3 {
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain$ x T& y" o/ h; T8 l5 T
today.
) D7 u; ], Y" W0 d& V, z* J Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
; z9 E: {- f( h5 u$ X5 Vemerging markets have no problem with funding. |
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