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发表于 2011-9-17 13:16
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Current situation
. b7 }' f# i$ c& e; a4 j" o The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long1 Q2 M* I$ U7 R8 y0 u4 ^" a# H
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may
6 I- q" M8 i: `; f0 ^! ]) s! Pimpose liquidation values.$ }3 ^& G: Z# b" Q* D c
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In1 h( A0 a B6 ?" C* [1 y6 f5 a
August, we said a credit shutdown was unlikely – we continue to hold that view.
/ s, R) z1 q! v9 W; j The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
+ r" E) r9 A" @9 iscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
) i5 k8 P7 a: A6 o: C3 x X9 L! u! |. v% M: r& p
A look at credit markets" W" q* W) S* h' w- _
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in1 O8 H3 I" f2 }1 }! e+ F
September. Non-financial investment grade is the new safe haven.' e( y. q6 R: ~& t
 High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
* o# o: Q7 [7 M" s1 T7 {then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1+ S4 b, H$ }( s8 z' G
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
4 k$ n9 r+ K3 q# y! T$ p' D; aaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade
4 p3 w* Q; X% _6 T0 ^8 k( Q) |CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are& N% V M5 }* D7 i. y! q! P! Y
positive for the year-do-date, including high yield.
0 o) ]& J5 c6 f2 i' q+ l4 K Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
2 o @. k( @# V* U$ C* T" [finding financing.5 q! r& t' P/ U
 Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
" a+ ?7 C+ V/ T2 O. _4 L, xwere subsequently repriced and placed. In the fall, there will be more deals.
* F. p3 w$ \& r# w& R6 I% R# j Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
C J8 }0 b( X8 M' tis now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
2 D7 R. M* B5 E. n2 F+ G) kgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for+ Q4 u% H! x- ~" W) d9 l1 M* x, E1 l1 {
bankruptcy, they already have debt financing in place.
' {" H8 _# c2 W; W7 _' H European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
4 U4 U1 b: @9 `6 m; r: w/ b! B8 U3 utoday.
- S! Q" f4 k @/ h) B Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in6 S1 O/ m* D7 o! Y: \* r. S
emerging markets have no problem with funding. |
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