Rising debt prices mean more money for options


The Increase in credit risks since July has meant a rise in the price of debt, although the effect has not been passed on by all banks to the buyers of structured products. Rather than pass on the costs to their clients, most banks are taking the pain, for the short term at least, in the hope that spreads will tighten.

In the recent financial markets turmoil, the spread between three-month Libor and, for example, 90-day US Treasury Bills as an example of risk-free credits, has widened by 93 basis

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