See also
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The wild markets of March 2020 revealed the capacity for severe dysfunction in what should be the soundest market of all – US treasury bonds. Can any market be expected to cope with such conditions without extraordinary help?
Spreads certainly blew out in the worst of the dislocation, but market participants say that while liquidity in the poorest credits was squeezed, in general the market for corporate bonds functioned well.
That’s in spite of chatter that since the global financial crisis, in a similar way to the Treasuries market, regulation that makes balance sheets more expensive or that curbs proprietary trading has stymied banks’ ability or willingness to hold inventory or intermediate the trading of corporate debt.
But two things are worth noting.
First, comparisons with pre-2008 liquidity in the corporate bond market are often flawed.
