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发表于 2011-9-17 13:16
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Current situation
8 d9 p! w# I1 a. z The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
5 ?# G& H3 X. @8 B$ Vas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
9 |( C) ~. j5 x) B, iimpose liquidation values.& i$ M5 O& q" N$ i/ i
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
! d7 w$ ~$ o$ Y, f8 ~0 KAugust, we said a credit shutdown was unlikely – we continue to hold that view.7 g% d- x6 L' t% i( V: D
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension' V# f; q! K# j1 k' @' F3 P
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.& u8 _) v" z, ]
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A look at credit markets
4 v( v+ g ^, q! \9 _8 {! o1 h Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in4 t2 w3 G( x/ o
September. Non-financial investment grade is the new safe haven.& ]& b. w: Y7 u1 s# ~# [0 q
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! b4 t% ]( Q7 q6 s+ G/ Othen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $10 Q; B, K" N. D4 w: M
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
/ K1 W+ v; X" Vaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
n$ q; @( u; ~CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
, r& G/ D6 J) o0 S* T0 apositive for the year-do-date, including high yield.
- q; l3 Q# Q5 e; p) A Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
n1 ~+ t: e) B% s! Q+ c$ S) Cfinding financing." v3 A) R7 C! v
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
$ p% Z- e x4 f! \* nwere subsequently repriced and placed. In the fall, there will be more deals.
. Z* ~+ `* L: y2 n6 J' D' P N! O. s Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and8 @/ J4 }- e5 i7 Q
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were( V4 ]& J4 n0 Z, O5 z" f3 J
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
7 Z+ u# ~# i! g! Tbankruptcy, they already have debt financing in place.9 R; w8 G6 M" M
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain5 n# W$ k2 T9 r
today.
: u) l6 X% V9 u. |5 L Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
! w3 g& z! J9 Z- A1 vemerging markets have no problem with funding. |
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