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发表于 2011-9-17 13:16
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Current situation
8 S5 p3 @! G' `$ [: b7 Q The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
) S) o+ P- ^( Was funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may% B$ S) H" j# G8 c# H
impose liquidation values.
: N' Z; d+ \. b0 ]) s6 K9 t In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
- x- X0 i5 f" _- A, IAugust, we said a credit shutdown was unlikely – we continue to hold that view.
7 r. ~+ W: U- D2 A2 Y. v% f The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension9 J: |5 [ U: J. d5 Y: _, T
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets$ S0 u: w$ J0 `! h' c( ^
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
+ h+ v/ R5 I2 E9 \! Y9 u0 [0 LSeptember. Non-financial investment grade is the new safe haven.1 L( q7 R- W8 k0 o8 z8 q8 ~
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
J3 j6 B/ T) ?0 G# h1 q# hthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
; u0 i5 H) h/ `billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have' b% M; [6 f' [1 Z4 E# K% H/ F
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade6 T1 L% `4 S( x+ q' [' t; @
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are% w$ \3 A9 E4 v! b* A3 c
positive for the year-do-date, including high yield.
0 Q' G( }3 t4 N8 x, B Mortgages – There is no funding for new construction, but existing quality properties are having no trouble) {* G! ~1 @0 n9 @# c9 D
finding financing.
8 n v# `/ L, S P. I Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
+ _. N& T) C. |8 k# y/ c- lwere subsequently repriced and placed. In the fall, there will be more deals.) C/ }+ d ]+ }( h1 X
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and& j( r. O) K5 j% B
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were% X4 S: }6 G* q/ s1 X
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for9 t( x. s, `" z' e% @; C! k5 {
bankruptcy, they already have debt financing in place.
. \- a9 r& Q7 M6 U European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain0 t6 E& a( l$ y# P2 Y6 v
today.
; D8 a- W9 i9 f2 w. V$ Q! G# s$ e' e/ R- } Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
. u3 e- E# m! J( nemerging markets have no problem with funding. |
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