Everyone expected a lot of US sub-prime mortgages to go sour and everyone knew that leverage in the LBO market was getting ridiculously high. But the liquidity crisis that hit the ABCP market in August was something that almost no one saw coming – and was greeted with panic and bafflement in equal measure. "We sat down early in the month and said ‘How far can this thing spread?’" reveals an ABS veteran. "We knew that the short-term money markets would be impacted, but it seemed that the entire ABCP investor base getting up and walking on 30-day paper was something that just could never happen."
So why did it? There must be a pretty good reason for the markets to get to the stage that banks will not even lend overnight to each other. Many see the problems in ABCP (and structured investment vehicles, SIVs) as the...
You must be a subscriber to access this archived content.
If your subscription includes access to the archive, please log in now to view.
To gain access to this content visit the subscription page or call our hotline on +44 (0)207 779 8999.
Subscribe online now and save up to 30% on your subscription.
If you are a trialist or subscriber, please enter your username and password at the top right-hand side of euromoney.com
Subscribers to Euromoney benefit from:
- 12 months access in print and online - on euromoney.com, read the latest issue early online, search for specific developments by region or sector, interrogate the results of Euromoney's benchmark polls, and view the archive dating back to 1996
- More than 30 specialist research guides free
- The results of Euromoney’s polls and surveys
- Tailored RSS news feeds direct to your desktop
- News delivered directly to your mobile device or PC
- Personalised email newsfeed of 'Top stories' and 'Breaking news'
Click here to subscribe