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发表于 2011-9-17 13:16
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Current situation
; p, G1 c* `9 M8 R2 I4 }, C/ h5 D The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long8 Y# f; H- }, o0 A, u& ?3 x6 I* I
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may4 }: a' N' _1 X) ^+ a! S
impose liquidation values.
* w) A! ]& b$ w( R In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In. U s. J# R# p! Y, c' ~
August, we said a credit shutdown was unlikely – we continue to hold that view.
* S% ?" ?' D3 [ The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
' o# T9 w& |+ n0 escrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
+ M# U" e a- w/ ^5 y2 F5 F* O8 K Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
% `' P. ?6 ]3 W5 S* n+ ESeptember. Non-financial investment grade is the new safe haven.1 [9 n/ |4 w, ?1 L& Z! @$ l3 U7 G
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
6 e/ O8 q; A% k5 lthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
/ R- S Q9 R- I+ J- ^7 Fbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
( ?! }1 R2 {5 d) uaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade }, u, o! G$ z2 U5 m3 x
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 T+ E( w- ]" K6 n" ?positive for the year-do-date, including high yield.
8 R- y! }; t7 f( ~ Mortgages – There is no funding for new construction, but existing quality properties are having no trouble* g& I# a1 g* t' H9 ?
finding financing.; ]; e* |( N, W* R( x9 l
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
) ]2 m) L2 ?6 O6 nwere subsequently repriced and placed. In the fall, there will be more deals.
( s8 b! ]1 \1 Z( Y5 f Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
/ K# [* A4 _ J5 `" \; Vis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# ]. ~, E- l! f0 G
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for4 L) N# q: \8 U+ U' B
bankruptcy, they already have debt financing in place.
# @- c( p. Q8 n7 T* V1 S European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
# G- L) ?1 P0 v' btoday.: J) @. F; i& Z. e
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in) m4 N) Y4 _' S, F
emerging markets have no problem with funding. |
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