To a certain extent, banks have always been about borrowing short-term and lending long but it is a matter of balance. Issuing longer-term debt and ensuring ample liquidity should be a high priority in the changed environment.
“You can see the fear in their eyes. There is a big lesson to be learnt here. I think a lot of financial institutions realize that, regardless of their assets, the mismatches of where they fund and what they own is bad and needs to change,” says a head of debt capital markets.
Has the failure of the interbank market created a new funding paradigm?
“It is not simply the drying up of the ABCP market which has done so much to drain markets of liquidity. The knock-on effect into ABS has been significant,” says Alan Patterson, head of capital management advisory at Citi. “To some extent this is also...
