Sovereign debt crisis hits liquidity
With volatility returning on the back of the sovereign debt crisis in Europe, liquidity remains a concern for credit investors. Markit’s Gavan Nolan outlines how liquidity can best be measured, and how it has been affected by recent events.
Think back to the heady days of 2006 and recall what issues were preoccupying the financial markets. At the time, there seemed to be no limit to the ambition of the private equity industry, while credit investors were struggling to find attractive yields with the Markit iTraxx Europe index at 25 basis points.
Some shrewder market participants may have wondered about suspect securitisation practices, global economic imbalances and the ramping up of leverage in the financial system. But liquidity
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