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发表于 2011-9-17 13:16
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Current situation- o6 d0 }4 M P" G
 The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
! [7 A5 A4 M" Yas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
% h6 ]; c' j% Gimpose liquidation values.
$ \- x$ {( _7 Z9 _ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
) \& u _: Y- p9 S5 sAugust, we said a credit shutdown was unlikely – we continue to hold that view." z- Y* P: u2 b( a4 i
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
/ n" f- @5 L& m2 b; R4 o0 _. C* `# tscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets+ e8 F% i2 \! k! |; b P3 Z( m
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
0 D8 K* W* E' l5 D* XSeptember. Non-financial investment grade is the new safe haven.
) x |/ W1 e, L3 G: D$ @# U3 E High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%% E, ?2 h! S4 L
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1' `7 ^; w, U3 m! Q) h2 k% Q
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
( m( I* l+ p: i baccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade) ]$ m2 ]* O3 ~0 ^5 R8 T
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are( C; F; c$ ~4 l: X
positive for the year-do-date, including high yield.
! t5 ?. s5 c( w, X1 V9 z Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
' u" U+ O, ~' Z# d0 _$ I; W- Cfinding financing.- Z4 b* B: V. h* c
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
g3 z0 U( y" u: Z) Q6 z* v, twere subsequently repriced and placed. In the fall, there will be more deals.
/ x, b$ O; K8 P; l9 Y Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and! P$ ]2 K3 R& P9 o) o6 D$ I
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
5 r- j) g: ?/ _/ L! P& t+ igoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
4 [6 }' x* O: o7 P }bankruptcy, they already have debt financing in place.
- t2 G+ [9 `" N, m% Q: X' G! c- K" t European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain) q0 d$ I* B* h/ f D
today.8 T/ t# b, G q
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
/ g/ z+ L6 a/ N, @( N$ Nemerging markets have no problem with funding. |
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