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Apr 08

Credit Crisis Continues…


Whilst the Reserve Bank drops their cash interest rates the credit spreads (as shown above) on investment grade corporate bonds are doing the opposite. It doesn’t matter whether you are a AA, A, or BBB rated corporate you are paying a record interest rate above the government interest rates. It amazing that these credit spreads are almost 2% higher than when Lehman Brothers collapsed. Anyway…I guess this chart explains to a degree why the banks have barely pass on any of yesterday’s interest rate cut…because credit is still very tight.

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