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发表于 2011-9-17 13:16
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Current situation
: I- s* `: S1 q# ~ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
8 s6 O1 F# H4 f1 Oas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may( G2 l/ ?+ S6 {/ @" @- R) E- c
impose liquidation values.
, H8 |* I) y2 {2 B/ v( N' x- o, l In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
9 k! y/ c/ w4 r# g2 _August, we said a credit shutdown was unlikely – we continue to hold that view.4 ^) n! t: Z5 N9 E* j
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension! u w: s2 f- R% D* h" j) ]
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets./ h2 `3 D5 A' w! ^8 b! A3 v
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A look at credit markets
1 B' u. \4 U5 z. d1 O! C% \ J& r Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
! B2 r2 Z2 e+ a; q* c! OSeptember. Non-financial investment grade is the new safe haven.
. N L, W, W5 b( O1 V" _$ ~ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%! G# a! u! s U# P. P
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
* \: x4 j% `8 @% ]# Fbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have5 q' V- E2 d6 x' ?# Q ~
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade0 Y) |/ @* S8 ?- s! d8 a; l
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; f) ~$ w; n2 y) |" o( |positive for the year-do-date, including high yield.
0 r) _8 F; N5 l, }! Z Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
$ {9 b/ P" K; O5 J$ }; mfinding financing.
* P! }2 h2 A, S- O, ~6 H Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they+ x/ _' m2 j9 _9 K3 J
were subsequently repriced and placed. In the fall, there will be more deals.4 E* g6 B% @5 z# _
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
( B0 [4 W" X6 k P% H% ^is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
: ?/ H# p! B. `8 I) Fgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for2 W- v7 [9 R# c
bankruptcy, they already have debt financing in place.
5 {0 {$ j8 p' R2 } European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
3 }2 K& B7 j) p& g4 [+ y* v' }) pemerging markets have no problem with funding. |
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