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.
Apr 08
Credit Crisis Continues…
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