Potential return to GG bonds as fears grow over Dexia collapse

With the future of Belgian lender Dexia in the spotlight, bankers on Tuesday suggested the bank’s troubles were the first sign of a crisis in European bank business models, spurred by rising funding costs and the broader market environment. Meanwhile, market participants said that although many financial institutions were comfortable in terms of liquidity, political pressure from regulators and ratings agencies was pushing them towards expensive public market issuance.