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发表于 2011-9-17 13:16
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Current situation
! j/ U, W, l2 W The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long7 d9 f% Q1 H: }9 m, Y$ f' y
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
# V9 f& ^! J2 {) f) a! K$ jimpose liquidation values.% B$ Z8 {% C. V; f6 h9 G/ h
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
; N5 M e/ t+ o1 |August, we said a credit shutdown was unlikely – we continue to hold that view.9 e6 m! E; c$ ?4 K) K* D+ T% H0 u
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension* B8 v; i) x5 S6 ~ a* c% H
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets
' ^; D0 ]6 ^3 T- o/ R Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in9 z4 R# f7 U3 ?9 w1 S
September. Non-financial investment grade is the new safe haven.
" r4 {) ?/ `+ ]6 \; X+ ~" E& C High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%: r# D+ C- P4 S; x3 w; M& \5 y$ W
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1/ R0 D& @' ]' s4 G2 \. n) t
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have2 T) Q( t6 R6 [. k
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade- }, b A' b5 _3 ~
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
& h+ u, @) }6 Epositive for the year-do-date, including high yield.
0 ~8 J( V# o9 p' q! Y Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
; I0 @( B4 j0 z3 e9 gfinding financing./ o2 _) t7 t( s/ Z A- B" M" n
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they0 ~* D4 t, P$ |6 p% J4 x
were subsequently repriced and placed. In the fall, there will be more deals.* `8 m2 I9 p& }, J- v5 [: m
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and; o, l0 n! R$ a9 D' L9 ]9 a+ ?
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
; D# ]" @+ r5 U; L7 v3 y$ dgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for0 l4 ?. g; \! s0 Z
bankruptcy, they already have debt financing in place.8 }2 A5 V+ y0 A: Z" Z; Q
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
" h/ h g2 |/ y, Y; @+ O1 F: ~today.
9 a4 C9 l0 T4 T; N- x& p* [ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
$ v0 w4 B# {/ `; nemerging markets have no problem with funding. |
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