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发表于 2011-9-17 13:16
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Current situation$ U7 _7 K- m2 ^7 D
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! h! D3 b* Y( R( h9 R3 M
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# w! ]# V5 \) G, w" a; Simpose liquidation values.
, y; F0 i! K. u# M! F8 K ? In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
. e/ P/ l+ h( C' W' FAugust, we said a credit shutdown was unlikely – we continue to hold that view.. q! P/ } _0 F. S0 ?
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
+ w$ }" U4 M& F2 o" E @* Vscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.; p ], B' s5 q% A# u" T
+ e' x r# v5 `9 y3 u
A look at credit markets
& H* q" ~% N( O* s& _ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
9 S4 D& i) p) ^3 pSeptember. Non-financial investment grade is the new safe haven.& Y( e" ?2 j* U3 W8 N" R4 N; ~) Z% g; z
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%. |1 l( S* V/ }0 z q( [4 {! q3 x0 r
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
# b0 _) N! y6 Q' a) e$ i1 ?' sbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
* r0 V# z5 ] L3 l b- H- }8 |' [access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
1 n5 d/ F. D5 R/ E) ]0 F& H0 gCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
1 B% ^, p" E. O opositive for the year-do-date, including high yield.
# U! h! U* i# Q" q* y! f) k Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
) U* v& k2 ]$ A m& V: \finding financing.
% t4 s2 q! N, H5 V Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they8 G7 ^& _* y3 L3 |
were subsequently repriced and placed. In the fall, there will be more deals./ G! X) O4 W1 m" v' G T4 |
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and a6 @- a& U, d; q7 }6 g. Y
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were' O2 j% Q4 A* Z9 `0 I x# H% m
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
# M0 o/ _ S/ \6 A/ z6 Rbankruptcy, they already have debt financing in place.' }, ]+ ]: f; Q; z$ m& f+ }
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
7 n( p+ [) c5 B; h0 }6 k! p$ Ttoday.
4 V# f& _) \ @! n& R& ?4 H Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in; }) `& L2 r1 k% w; p4 U+ i) o
emerging markets have no problem with funding. |
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