Bond Outlook February 25th

The enthusiasm for new high-quality corporate bond issues continues, implying a further displacement of bank credit to the bond markets. This helps the major corporations but leaves smaller companies out in the cold. It does not look feasible to bypass banks in assisting small businesses, so our expectation is that governments will further increase pressure on banks to force them to recommence lending.

Last week we raised the issue of how banks can be bailed out but not bankers (lawyers must currently be relieved no longer to be the most despised profession).