Credit Spreads Continue to Get Worse

FDIC Chairman Sheila Bair commented in a press conference this afternoon that she expects the credit markets to continue to worsen, and judging by the recent action in credit spreads, the market seems to agree.  According to Merrill Lynch data, interest rates on investment grade corporate bonds are currently not only at higher levels than they were at the Bear Stearns low, but they are also at their highest levels ever.  As of yesterday's close, investment grade corporate bonds were yielding 312 basis points more than Treasuries, which is a 118% increase over year ago levels.

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Comments

[whidbey:]

Does this surprise someone? I hope not it seems to have been unavoidable since banks lost a lot of their liquidity. This is not so bad as it seems; it sobers up the borrower and discourages the marginal deals. It also cuts employment by the small firms who are shut out. In the end it results demand destruction via lost jobs. More ugliness to go, much more.

2008 Aug 26 07:35 PM

[Pickings:]

Is this spread data available in charts online? If so, where?

2008 Aug 27 11:13 AM

[The Cynic:]

How much does the current spread exceed that which existed at the Bear Sterns debacle?

2008 Aug 27 12:39 PM