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发表于 2011-9-17 13:16
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Current situation: \4 Q; G0 G& }7 P- n* q/ }( y
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
3 |* f+ y$ L$ Was funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may! t6 s2 N# l4 i
impose liquidation values.
- _4 {" a$ E/ W5 v7 X) Z" ~. j In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
1 H: `/ S4 A( R( `August, we said a credit shutdown was unlikely – we continue to hold that view.
7 S# V, v5 }/ r; K The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
( R: D5 Q3 D1 h L" O0 nscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.& ]4 X- i- {! H- @4 Y% S4 ?* I
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A look at credit markets
3 f" B# B0 j) t1 ~. W Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in* @: t/ n% d/ i- z) U
September. Non-financial investment grade is the new safe haven.
! _* i6 A/ b ]8 O High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
6 G# d, I! i$ K; ]then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
7 f) H; p+ f) x! X$ bbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
1 J/ s) H0 Q9 o) e3 ?6 Zaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade% o. e0 | v1 T" B
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
; l) Y- r# g ypositive for the year-do-date, including high yield.
) Z; p7 J1 P/ X7 B0 P& P% H% R Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
B1 A( a8 U, Rfinding financing.0 |# {1 z( V1 u* s1 H8 A
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they. m" S! R: H1 N( x& t- p* J
were subsequently repriced and placed. In the fall, there will be more deals.( ?" i* I7 m7 x; o
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and/ J/ u. ]. F) o$ x# {
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were6 W4 O; X' D ^
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for1 }; Y" p$ @- @! M
bankruptcy, they already have debt financing in place.1 H% {6 x7 Y: a+ P2 s: D% ]+ r; Z6 k
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain1 k' v! C: ]. i X" S( x2 z
today.
9 N( ?- Z/ |9 g6 K5 w U Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in' @3 C$ I# S$ w4 q! J
emerging markets have no problem with funding. |
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