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发表于 2011-9-17 13:16
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Current situation3 p. y, _/ ` D# Q% _! O6 v5 x
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
" P) G2 S8 _4 ras funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may1 H. G+ [8 G3 S
impose liquidation values.
# H9 r) Q' k( E- ] In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
7 C3 ~8 M& z8 p# E) O" oAugust, we said a credit shutdown was unlikely – we continue to hold that view.
$ M1 z3 k, L$ [" q The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension. Y( O4 s/ I* g+ I
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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8 k, W1 X* x% W$ h0 O- o7 `- ZA look at credit markets6 N7 ^: i) F& b# l7 O
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
7 k& }, j1 b4 @/ N& M7 ]1 \September. Non-financial investment grade is the new safe haven.
4 U" M# {9 H/ J3 S5 ?" w High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%2 t8 I- S7 a2 Z$ Q% _
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $10 f, q. p/ |. ~/ Z/ ^
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have" N; p' f0 [- u+ ~& L
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
# z% Z1 K2 o' s% E tCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are' b8 M, G& c0 X/ s) M3 Q9 r
positive for the year-do-date, including high yield.2 [" s, Y. j4 }+ w: [
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# D! n* `' E$ ]& a" G! q
finding financing.7 y& e' E6 F7 f7 \- ~+ k
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
* R" ~8 x) `2 r3 a: j- L2 mwere subsequently repriced and placed. In the fall, there will be more deals.
* o. z$ u8 C& l; C5 s" S; D Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and9 x# x) T6 U* e- u B6 J* s7 P" F
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
$ Z+ e7 q& U2 D6 v( {9 J& D4 ygoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for( F9 }! B0 @4 |
bankruptcy, they already have debt financing in place.& i, d% d9 R6 q* R6 X* r8 ~
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
! T# v' x* ]1 V8 V E7 ?today.! H/ ?8 e: o# J5 F2 E( @
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
$ e5 Z1 Z3 i' [emerging markets have no problem with funding. |
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