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发表于 2011-9-17 13:16
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Current situation
7 l& f3 `0 K. _1 F! K The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long: e. t ?+ F4 t- ^
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
& ]) V' w7 K7 r8 Aimpose liquidation values.
% w6 I/ H2 B5 Y' m In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 j, E( d- M* U1 h
August, we said a credit shutdown was unlikely – we continue to hold that view.7 S N) Y f& {1 _/ X
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension1 q" ?8 ?6 I& p9 t& H5 f5 ~7 `0 X
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.' m' p2 V, N( I# ? B
: ~( ~& y4 Y+ Q2 p8 E8 bA look at credit markets! h1 n9 U+ o; X, m' w1 M
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
; F5 t1 f2 m, r; NSeptember. Non-financial investment grade is the new safe haven.& A1 z$ z- q7 T6 L* U% W
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
1 v: l" r5 O7 E+ ~. }, e6 mthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
, y$ q7 o6 q5 {2 L( a: X. F5 h$ H/ Rbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
& N1 \7 j5 x& k; s) Laccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade x0 A3 o c& }8 W4 _
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
C: A8 M% `5 N# W' F& ~7 |; cpositive for the year-do-date, including high yield.+ ?+ j. I5 a& b$ z! w: T
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble$ b5 k% F* x' y' h- l
finding financing.; _( |: u$ Y0 L9 n1 t
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
9 I/ k p+ r5 O k- f. Ywere subsequently repriced and placed. In the fall, there will be more deals.
: T( K& e3 f4 I5 \" ]2 P Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
" R- h- s- s$ k0 B) R$ G' ois now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
# X" P7 U5 O- x$ K/ qgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for% k! J' U& D3 c1 k) v; |% M
bankruptcy, they already have debt financing in place.- u% ]. F5 }# s9 _: x+ a" g% x
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain0 o1 w2 \ z% b3 o* Q1 N0 S$ R9 I- {
today.
5 `# q$ Z$ P. z0 }( b) ^. ] Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ C- j7 `' h/ S
emerging markets have no problem with funding. |
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