Corporate bond market: The new liquidity trap
The liquidity-starved corporate bond market desperately needs to find a post-regulation equilibrium. Banks just can’t commit capital to market-making. So the smarter investors are looking at ways of delivering it themselves
The corporate bond market has a problem. In August that problem was masked by a record $120 billion of primary issuance worldwide during the month. The problem is not the amount of paper being issued – at least, not yet – it is that in its short trip from issuer to buyer these are virtually the only bonds in the market that are going anywhere.