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发表于 2011-9-17 13:16
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Current situation
: ?, a, b2 O, M- f The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
. p% ?0 U1 C2 g( Bas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may9 j2 X7 o$ o; I$ }7 R1 N! {8 m C
impose liquidation values.6 o' C6 L2 t" z' h! d5 h }3 Z5 L5 j# @7 V
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ H% Z! p% p! O; s$ UAugust, we said a credit shutdown was unlikely – we continue to hold that view.
( {- O" G4 r, L8 I) H$ o2 U The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
' r9 S F" M6 @/ g4 V. U' {scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.. ^! M1 O" t3 `
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A look at credit markets* i$ _4 {( f/ F O ~& l( L0 h
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
) `1 f5 F" E2 J! A- z, ~! l" n: O7 cSeptember. Non-financial investment grade is the new safe haven.
; q" R0 \: ^; f High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%+ I, I/ W: ~+ m0 H4 {
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 b# N0 t. ~0 [8 D, Q( b1 f
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have) I' E' t }8 }. M1 E
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade2 |$ u, `8 S$ s( E
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
. x- y2 U2 m9 |( v! U) k7 Fpositive for the year-do-date, including high yield.
" o- B9 X9 E [9 l; } Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
; F4 Q/ m" f Dfinding financing.
1 ~0 x; _3 O s* f# Y" C Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they# N- ?( E) ?$ o) X
were subsequently repriced and placed. In the fall, there will be more deals.
4 j. L* N; W4 s6 i2 t- h. t Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
8 H0 W' e9 w4 l$ T1 |is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 J2 d9 N: d7 [7 ^. r) lgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for6 S, T8 L6 u0 D' C8 |* H4 }+ x; [; `9 U; }
bankruptcy, they already have debt financing in place.
; P3 x+ n5 [! _/ T8 O- z6 } European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain4 A% ]7 {2 U! n9 A5 ]3 ?2 U: I
today.
, Q/ s6 V' {. ?/ ] Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
0 q7 ~' v0 S( l* semerging markets have no problem with funding. |
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