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发表于 2011-9-17 13:16
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Current situation
- d9 I8 U, I2 L/ `9 Q D# E The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long5 M+ E2 H& Y5 `4 ^
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
0 m# s2 v q& T1 Y1 @+ ], x5 Vimpose liquidation values.8 S4 z+ b; K# ?, t
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ ^. ^: z0 a0 L& h- l8 O* }/ u' `August, we said a credit shutdown was unlikely – we continue to hold that view.: r/ y, U% Y, P6 d$ H7 i/ E
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension1 p h; {" F8 x8 n8 w+ r8 n
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.: a" s ]: T; d2 b9 V! ?6 @! a
& J X3 {' b+ Y3 }; s, ZA look at credit markets/ s% z! i% K) O' w. H
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
# r; z0 u- i! @0 L1 o1 cSeptember. Non-financial investment grade is the new safe haven.! y) }" Y0 Z( p
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
* r8 f$ ^* e4 G. {/ q$ lthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1 S) r5 [! O5 W1 K" g0 s4 r
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have( d' r# L+ J) b8 T8 _( s3 s p
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
! b5 i- C: u; \0 UCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
% F5 c4 D% S; l. G/ `( _7 Y6 M, Lpositive for the year-do-date, including high yield.
- G4 S' C9 K$ z7 w& w; F# D7 Z Mortgages – There is no funding for new construction, but existing quality properties are having no trouble, i1 B9 U/ N0 C% U, U9 E7 Y# j
finding financing.
3 T4 U5 a" J2 ~: @2 {9 y- U; i Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
1 }% D7 A4 f$ K5 {3 f9 |0 H/ bwere subsequently repriced and placed. In the fall, there will be more deals.
% j* m1 E7 p R; ?3 p Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and) B( Z& ~: E# F; H1 Y
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
# q: P# X4 o2 w0 ~& ]( a& J1 Mgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for' l) `. D/ S% r2 @5 R# F/ ^/ n
bankruptcy, they already have debt financing in place.& n% V3 K2 V( Z
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
; r0 t9 x8 F) {: P0 L2 Utoday.. ^) @1 L$ X$ P9 I( z
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ N- k' }, K% o1 Y
emerging markets have no problem with funding. |
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