Three years ago, five-year dollar bonds issued by Ford traded at 150 basis points (bp) over US treasury bonds, and holders were lucky if they found three banks willing to bid. Today, the spread has tightened to 50bp and investors have a choice of 50 or 60 dealers. Ford is not an isolated example. The credit markets have experienced a general “compression of spreads” during the past two years, according to Philip Forrester, director of global asset swaps at West Merchant Bank.
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