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Opinion

Macaskill on markets: Banks search frantically to fill trading revenue holes

Dismal trading volumes in the third quarter were punctuated by some chunky investment-grade bond issues and stock offerings that were a disappointment to investment banks in terms of fee generation.

Jon Macaskill is one of the leading capital markets and derivatives journalists, with over 20 years’ experience covering financial markets from London and New York. Most recently he worked at one of the biggest global investment banks

Jon Macaskill is one of the leading capital markets and derivatives journalists, with over 20 years’ experience covering financial markets from London and New York. Most recently he worked at one of the biggest global investment banks

So a boom in high-yield bond and leveraged loan issuance has provided a welcome bright spot for bank chiefs already worried about how investors will receive their quarterly results.

The resurgence in leveraged debt issuance could also make a contribution to market stability – another welcome result as sovereign debt worries resurface and gloom about the global economy spreads.

The revived leveraged debt markets are starting to see a return of some features such as covenant-light loans that were symptoms of the credit bubble. But both absolute rates and spreads on new deals remain substantial, which indicates a realistic alignment of interest between lenders and borrowers.

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