US and European bond markets are suffering. July was the weakest
month for US bond issuance in seven years and the situation in
Europe is no better, though the true state is obscured by the
August slowdown.
The primary equity business shows no sign of picking up, and it
may be months before corporates accept the new price of equity.
Suddenly investors and corporates see risk everywhere. The former
are in the midst of a flight to quality and the latter are
retreating into conservative strategies.
All this feeds back through the banking industry and leads to a
repricing of assets.
Investors are unwilling to take on more credit exposure unless
they are fully confident in an issuer's credit story. But the
markets have not closed entirely. David Marks, managing director
for debt capital markets at JPMorgan, says: "If you look back at
the typical market crisis, such as emerging markets in 1997...
