Liquidity poll 2005: The test lies ahead

Investors are now content with the quality of secondary bond markets in Europe. They can transact large sizes on tight bid-offer spreads without moving prices against themselves. But is this just a bull market phenomenon?

Liquidity poll methodology and results

AT FIRST GLANCE the bond markets seem more liquid than ever, with lower volatility, more risk takers and ever-narrowing spreads. Bid-offer spreads are around five basis points on investment-grade credits and down to as little as the equivalent of three cents on AAA bonds. That’s a vast improvement from the early days of the euro credit bond market when investors complained about the difficulty of finding a bid for blocks of bonds and discontinuous price movements.

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