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发表于 2011-9-17 13:16
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Current situation
3 W7 h& ~" @- H5 @& S The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long
# x P/ F- f& l7 D# uas funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
; F( {: @* [ r7 n* N; Qimpose liquidation values.
7 i9 O' s% z% F0 M, j In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
1 M7 d; j W: N! [* o q% fAugust, we said a credit shutdown was unlikely – we continue to hold that view.
' [. d& }! B) m% F The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension O5 h, ^/ b: i0 V; x
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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5 {2 f6 i& o& A& {: IA look at credit markets
# G8 R/ |* A6 ^ Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 M9 ?- O! i4 N6 S8 _8 e
September. Non-financial investment grade is the new safe haven.5 j$ G5 P/ M1 C0 }/ J
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
; d, \- s% k' j) A" t# x: ?then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1# U( r$ q6 k/ J# m% p' k
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
8 m, w8 d3 m* H9 q! F: s+ r6 Caccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
9 I! V4 r. Q8 n4 A; K; H7 z: ECCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are! _# g5 x+ s- D* J: y9 ^" B
positive for the year-do-date, including high yield.' p0 {( C6 d$ ^/ e( `& Y( V& V5 s8 i
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble- h/ s3 j9 n9 O9 z3 s& S
finding financing. Q: O& X9 v( O) c- B
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they/ {4 v" E* Y) \
were subsequently repriced and placed. In the fall, there will be more deals.. ?( Y& l% d1 f5 d, l! l
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
; ]+ B/ m! M8 [is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
0 }; p |( }# I0 f& \1 f" W6 Wgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
5 a& v( ]+ l4 ibankruptcy, they already have debt financing in place.$ D$ t5 p9 i! {1 T; \+ U% r/ }* g# ^
 European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain0 u1 w( i4 V) i* h/ F- J+ i
today.- y( |: U' D9 k
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 ?$ |; j) r/ k1 `; \7 ]4 |: p& n& ^emerging markets have no problem with funding. |
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