The big freeze

Lack of liquidity in the secondary markets is a constant headache for bondholders. With banks more and more cautious in their market-making activity, Oliver Holtaway asks what steps investors and issuers can take to get credit flowing


Ever since the 1997 Asian financial crisis, liquidity in the secondary markets for investment-grade corporate securities has been drying up. And the stagnation seems set to continue. Investors with a newly enhanced appetite for credit risk are frustrated with banks that refuse to play ball, or that price liquidity risk in their spreads too cautiously.

Certain segments still perform: major telecoms such as France Télécom or Verizon; Ford, GM and the major autos; as well as some

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