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发表于 2011-9-17 13:16
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Current situation
8 J& v+ t4 |/ i: q& G3 u The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! _1 j" l) Y" _0 D8 R
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
Y) g* {; ^6 oimpose liquidation values.
: a! ?2 b& @7 E3 {9 u In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In6 e+ ]9 u2 P* { }
August, we said a credit shutdown was unlikely – we continue to hold that view.
& L! g% Q4 W/ e/ M The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
$ i/ h, U& b' |! Jscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.3 W0 q. i. k! U3 \
5 V5 V U8 ~6 `6 C/ B, u) sA look at credit markets. g2 N8 V8 _7 g& Z1 b
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in0 }3 [# H& c% ^2 r
September. Non-financial investment grade is the new safe haven.
+ G# H9 v; d1 F- N6 _ High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
# {" l' j( w* Q7 Y3 \1 z/ w, Qthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1
4 N3 A' \; L8 P7 z7 P5 O1 Zbillion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have7 Y3 I/ p4 U. L: t/ Z8 N" J
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade7 N7 B0 T- u1 b q
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are+ ^& [4 e' Y- |3 e6 |6 {/ \1 k
positive for the year-do-date, including high yield.
; Y- O6 f% M( U5 E Mortgages – There is no funding for new construction, but existing quality properties are having no trouble+ o4 G3 U- L$ [9 z" H
finding financing.
& T1 w2 @, x6 m' }- Q; _" D Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
6 W, j% o2 r) K6 Z0 `were subsequently repriced and placed. In the fall, there will be more deals.
9 F" D3 |! F6 s' k; t Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
! g) ]; a A& K! O) ]/ Qis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were$ k x7 N5 a* r! d% F& X
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
0 V# N& T1 b- A# O. ?' Cbankruptcy, they already have debt financing in place.
3 u7 j" H- N+ J6 l% V* M/ f European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain( N1 L9 K( o4 ?6 d
today.
6 X8 z% ^$ {3 h* _7 o9 i Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
9 j. u; c: ^$ J& qemerging markets have no problem with funding. |
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