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发表于 2011-9-17 13:16
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Current situation
" y3 ?9 J9 T' K- _7 Q* H The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long$ F( j; L) U) d. Z9 u5 I( l: a
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
' t7 c9 w2 z0 X2 e+ c4 gimpose liquidation values.
+ M5 S% [- G* f7 w T1 Z2 d' S" Z In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
/ f6 Q3 \ G# mAugust, we said a credit shutdown was unlikely – we continue to hold that view.
* v3 e3 T0 C3 K The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
1 d/ d' s; N8 J/ }. v0 S$ v7 i' lscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.) f- W( V2 K+ _) p( d: @1 U5 P
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A look at credit markets0 B3 _) z0 F0 X' n# b/ p/ z# |- |
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in, o/ R" e- i) `0 n
September. Non-financial investment grade is the new safe haven.8 z8 Y' \% D* o0 ]5 Y% j! z7 N
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%0 {" S+ ^0 `0 U+ Y
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
$ _2 v/ P0 \/ ?! |, nbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have9 ?6 @( W5 p$ L8 c# a
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 m3 b! {# H4 N: Y3 P! L" r/ dCCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
8 W% T) L" M* }, H- d% ^positive for the year-do-date, including high yield.
0 _ f( S6 F/ R/ V Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
! [5 W, \ v: S- Q6 ?" rfinding financing.
9 h% Y/ d; |& U& c2 f Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 S& r( w9 }, G) [! ?
were subsequently repriced and placed. In the fall, there will be more deals.
4 X3 j. l& l! }" M: t I; O* M Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
1 [. v- j; }, L4 Lis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
) p& H" t9 [" p% u; i5 y2 tgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for3 |/ O% D3 D" g% n: j" H3 j
bankruptcy, they already have debt financing in place.
+ ^3 W6 W/ [4 }5 K! K0 i; f/ K European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
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 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in$ v5 W3 D; }$ l" d
emerging markets have no problem with funding. |
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