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发表于 2011-9-17 13:16
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Current situation
' C8 A k8 [' ]- m% [ The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
+ V) W# _# U+ v6 X( \ h- tas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may8 k, i6 _8 H7 j0 G$ x
impose liquidation values.
, a8 R4 }" d5 ^: ]5 A& w1 Q% j In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
! Z) f, u0 Z" X* K5 VAugust, we said a credit shutdown was unlikely – we continue to hold that view.1 x# m4 W! Z# t/ i, |2 O1 B
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
* s0 ]4 D5 ~+ K8 D1 f* o& fscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
; T7 ?! c( f- {' R0 u, q- b1 h Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in% l3 Y% d; ?& Z+ _$ a9 T h8 }
September. Non-financial investment grade is the new safe haven.+ G3 A v8 x" L3 `* w- W
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%* ~) }3 `6 G* i7 c
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
- }- O N( z* {billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
9 i0 r6 ~/ j2 P( baccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade: @/ ~2 H( h1 t# T4 S
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
7 t& b' o4 t+ Dpositive for the year-do-date, including high yield.
& _" D2 u. x* Q F2 Z* Q, | Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ ~0 s- V7 n& {5 j' V& _
finding financing.
8 ]" E/ C/ t V% r4 M Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they) m( b! v# m0 e. w: {
were subsequently repriced and placed. In the fall, there will be more deals.
8 z* j) J2 f" X; P! ^, t7 d, E Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and2 [" f8 u3 F5 j( O- ` c
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
. X. c6 b* y' K2 Y! ?% ?going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
- g: x. C" s. v$ g: [+ Kbankruptcy, they already have debt financing in place.
4 ]( D `9 y% w' o+ v, ` European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain4 X1 O5 F1 ]' ^9 c8 A
today.
/ X) I4 y( C! g8 Q" i& p Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in: `+ N, r! ]0 T- o) V' g4 \
emerging markets have no problem with funding. |
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