IT STARTED SO well in the first quarter. Debt issuance began with a roar as European banks raised €288 billion in the first four months of the year, most of it in the first three months, putting its run rate well ahead of annualized forecasts that had predicted issuance of a shade over €500 billion. By the middle of April, the market had closed as the sovereign markets took centre stage, with banks caught up in the furore as spreads widened across all credit asset classes, and banks themselves provided more detail on their exposures to southern European sovereign debt.
The European Union’s 11th-hour solution, a €750 billion financial aid package, was supposed to restore confidence but it failed to materialize in the weeks that followed. Then Germany’s...
