A creditable spread

With falling share prices squeezing returns on equity investments, pension funds are seeing an attractive risk premium in current credit spreads. But, in light of an uncertain year ahead, they are proceeding with measured caution. Blake Evans-Pritchard reports

Ever since the onset of the current financial crisis in August 2007, banks and other financial institutions have been grappling with the level of debt they are exposed to, and trying to work out how to adjust their books so they regain some degree of normality. Not an easy task, given the complexity of the global lending markets prior to that fateful summer.

There have been a couple of high-profile fatalities amidst all the subprime chaos, namely Lehman Brothers and Bear Stearns. Others, nervous