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发表于 2011-9-17 13:16
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Current situation
# q! s' j: I' h$ d The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
v4 E0 F( Q6 {# @4 n7 uas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
& g% v& Y: |" N3 Q: wimpose liquidation values.
( g8 {) V0 D- g) p0 p5 l In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In8 H# W6 r7 a; {: Q- G# [
August, we said a credit shutdown was unlikely – we continue to hold that view.
/ L& F% h$ a/ e The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
' q& u# G9 ]0 s6 I: }- { Sscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.# o" C, _9 Y4 R; R
1 v' n: H( u' N$ e6 {0 U9 b
A look at credit markets1 D# Z) W8 W r1 K
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
) v7 F& `; ^9 ^4 E& n5 VSeptember. Non-financial investment grade is the new safe haven.
8 L$ M: m$ } c6 E) P High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
2 k% ^" T* U& d4 V& s9 Nthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1& w- m; N; q e& ]
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
' M) |6 |# a+ O" j' ~access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade' f5 R4 K) T0 v, N* E) L* A
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are0 S9 R9 q" v2 ^" ~( Z! v
positive for the year-do-date, including high yield.- N7 ?/ o, y: [
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
N. [( O( r2 X) \/ I* l1 E8 ofinding financing.
8 F, B8 R* ]3 [+ X" @7 F& c1 B Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they4 r: w: D+ X2 {% N: E5 k! r. n( Y
were subsequently repriced and placed. In the fall, there will be more deals.
! G, ?/ z( d& s ?: Y' s7 U Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
( B" Q4 ]9 x# `1 l# w/ F# ~2 N2 S8 Fis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# k+ R2 Q* M/ X
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
$ Y) i8 D. n) dbankruptcy, they already have debt financing in place.: O) o9 o' g/ |7 t* O
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
" G) T4 d9 l1 @9 n8 I: P/ Ytoday.
* \% Z) D V' u; K' A4 x3 a Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
, j5 r# s, q1 Z* @. a& l$ C Uemerging markets have no problem with funding. |
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