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发表于 2011-9-17 13:16
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Current situation
" W9 h. h" ~! Z% I t7 ?) b# P The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long n* H' `8 K' f' }7 P
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
0 ~4 s9 b6 s U6 y U9 Yimpose liquidation values.
; i' v7 e4 {' g( F: Y9 V In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In# A: W, I3 Y# \2 p! f8 T
August, we said a credit shutdown was unlikely – we continue to hold that view.* D# a9 v8 m! l0 h& \% N. M
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
5 x8 c# z" w) ~5 T! @3 y5 y7 mscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets. ?( S/ T1 {9 k3 Y& _2 q. }; v
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A look at credit markets1 ^9 g& X, \( U& n9 |
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
: l; ]: G {) j. R9 k* ?, zSeptember. Non-financial investment grade is the new safe haven.
9 l( C" U4 G5 y$ ~+ Z6 u, b! X3 g High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%* G2 z/ t, S& I( a. `, }7 }
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1& o& z l, i9 S6 A
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
; k9 a2 d. A# V/ |4 Q' g5 naccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
6 S4 x* g; o O) S, M6 K- [" ECCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are1 e8 t7 |8 g2 Z. e+ t" {; E! k/ s9 ~; q
positive for the year-do-date, including high yield.
+ G7 x. [- Z" v+ R0 E Mortgages – There is no funding for new construction, but existing quality properties are having no trouble; T! k9 F/ I q) x& M" E9 f: H0 }: n0 z
finding financing.4 p0 S# j4 k* C3 Q8 k
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they V' `2 b4 k& |0 {( O, j
were subsequently repriced and placed. In the fall, there will be more deals.# g$ _2 Y* m& q/ l. T6 O0 s9 M
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
* W1 B% j8 {( X) Q" ^is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were! c6 A) a! O0 U) O A( k
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
1 U# m* A* H/ G# s! m+ Obankruptcy, they already have debt financing in place.: `1 L! P! T3 Z, P! ~8 r% j
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 E+ v/ ?! v; U J) Mtoday.
q+ _/ A- `( d" T# A9 H# g/ y Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in5 y8 P) j/ S+ i
emerging markets have no problem with funding. |
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