Interest rate derivatives poll 2008: Fixed-income derivatives rankings - The rates business rated for 2008

Ronan O’Neill spoke to senior rates professionals.

Interest rate derivatives: Rates - a year in the market

The interest rates business is the single-biggest revenue source in the investment banking industry. Rates revenues exceeded those of the credit business even during the credit bubble years. But now that credit revenues have collapsed – indeed have turned negative at many large banks – the rates business is all the more critical. For under-capitalized banks that over-invested in the structured credit business, the performance of their rates business is the key to survival.

When the credit crisis first hit, rates revenues held up remarkably well, supported by increased volatility, wider bid-offer spreads and the structural curve steepening that was prevalent across the industry. But in March 2008, after the Bear Stearns rescue, the market became much...