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发表于 2011-9-17 13:16
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Current situation
) }- X; K4 U0 n1 K2 c! A" o+ t The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
* B; r$ P9 i0 L6 M' l8 bas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may7 x4 l ?, u" L* O
impose liquidation values.
6 N# p f. |; p0 N" k In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
. b( B3 t. w: A8 H! F) [+ \August, we said a credit shutdown was unlikely – we continue to hold that view.9 G) v$ ?8 e5 }0 u# F. M$ S
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension2 A7 i# ` e4 W7 {. B) {) H( `
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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$ D; i5 Q7 g- }$ qA look at credit markets
5 ~- a- q4 n8 n2 g Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
* t& R+ v* J4 VSeptember. Non-financial investment grade is the new safe haven.% P5 {6 j; p0 ]2 Z" u$ [) u
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%1 H6 ^ [4 o6 H- E- ~4 i" {. N
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
' i9 J; N) g9 q, n' Obillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have6 `4 l" ~( G- h/ O* N/ K" [$ u
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
+ F. y. ^( {8 M0 HCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are, A" y5 D# ?7 f. \( e; t$ z7 c
positive for the year-do-date, including high yield.+ B% F( @! E/ N
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; y5 q/ j4 M8 c) w6 E0 V% r
finding financing.
% }2 y8 N4 n& Q7 y Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they& S6 u( t+ W3 ?' y5 G# [ E" `
were subsequently repriced and placed. In the fall, there will be more deals.
8 d+ N' S% p" V& n5 U+ a Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# N( U+ L* @9 r5 o7 Y; t
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
2 }' }3 p- ]3 C2 {going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
4 W" i: B7 A( N8 e, ]. Y, gbankruptcy, they already have debt financing in place.0 X( ?" X K# L# b
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain- k; t5 ^! J$ a2 h
today.+ o, I% v4 t+ m$ X( ^
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
+ v5 A- }: y1 p p: demerging markets have no problem with funding. |
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