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发表于 2011-9-17 13:16
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Current situation; v$ n* x; ]! h' x% l" n! i
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
& N+ W7 z3 j! pas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
O- c# n+ ^! k- e/ eimpose liquidation values.
8 t( |) p+ n; L" K In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In! V+ z U) O, U. o( V
August, we said a credit shutdown was unlikely – we continue to hold that view.
' C' b6 G2 d7 i/ F" j5 J K The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
4 `2 m6 k8 C6 `. \scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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, x5 ?2 J1 o6 |' t! zA look at credit markets2 j; p. ?3 g: d% d
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
+ A4 g+ b+ k \. c8 C' j. q# H$ bSeptember. Non-financial investment grade is the new safe haven." b! n- ?5 M4 g" f
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
2 X; D) c+ L1 {. F2 l% }/ T9 z: Vthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
% x1 h1 f# E, c# _% k, mbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have% }1 z& i% t) k8 _9 i% {
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade; O2 U& J) C4 r! h$ F: f- t' a
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are, A! v1 L0 [" @
positive for the year-do-date, including high yield.
t/ H# N! |0 }& E Mortgages – There is no funding for new construction, but existing quality properties are having no trouble8 O6 J) n0 I+ F# g. Q, ]! w; U, j
finding financing.6 K/ {" U" z& ^- q) M+ i: D
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 i2 @% v# D" @7 {
were subsequently repriced and placed. In the fall, there will be more deals.
, d- d& T& f$ n) G& I2 T8 v Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
6 E( o. J5 z( E& Y. Yis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
9 {: O1 z0 n9 x& h& h7 d3 I4 [going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
3 ?+ a) F: D4 @6 B2 h+ r2 Y3 mbankruptcy, they already have debt financing in place.% a% z) ^! ~' V4 d( r3 {
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
9 k% v) v0 i& f( ~4 ctoday.) | i0 B' p( n I, S# c
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in1 Q& U# c; @+ m: @) ?9 w
emerging markets have no problem with funding. |
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