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发表于 2011-9-17 13:16
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Current situation
# X/ O7 M3 {: a# T7 H1 R# m5 i The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
. S0 I# f9 Y$ f4 E% U% W8 tas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
1 V! ^% @8 y6 N; b% i5 q# g* vimpose liquidation values.
7 `) R0 ~+ p0 H5 W* F In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
; w" m2 `/ Q$ C/ t9 Y/ TAugust, we said a credit shutdown was unlikely – we continue to hold that view.
; B3 n: @( I6 f4 n6 i- Q+ d* S The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension7 b4 Y5 I. W, n, d
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets., f. a" O3 W; \, o: ]
4 R4 T: C; c1 Y% `& a. GA look at credit markets5 ?% [8 A5 N/ z
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
% M( C+ z4 w6 U$ y* cSeptember. Non-financial investment grade is the new safe haven.( ]- Q: }9 C7 Q3 l8 n
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
& \, }$ k' S: Z* C! gthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $17 l& f( V1 O, V" _& D
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
& i6 {: j% f2 G) Gaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
- p( r& A6 ~) q% sCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are& O9 W& l8 [ ^8 @& b! L
positive for the year-do-date, including high yield.
7 t, v- y# M" x6 T Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
* m4 o7 D* [+ E; k# V. Wfinding financing.
6 c p& p" ]+ a% a5 G8 f/ [ Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they8 ~9 c, t4 ]7 u! y( H# J/ W+ o1 o
were subsequently repriced and placed. In the fall, there will be more deals.( i& x! Z5 H9 Z, y# A& L$ ]
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and7 @ i( y( @* v, D5 M3 s
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were# } R+ i. I: G/ B* h. @" }' ]
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for) E4 R7 @0 G4 J: M0 Z& z' F
bankruptcy, they already have debt financing in place.
8 y$ G) H& n4 u& j3 V2 \, O4 s European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
' [7 d9 R3 i, \9 [! utoday.
% ^- h. W9 b: u$ f* \ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 J& `- D# I. Oemerging markets have no problem with funding. |
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