Bail-out set to flush out senior bank bond blockage — flood of issuance likely

10 May 2010

Financial instiutions bond bankers welcomed the EU bail-out package, as spreads for financial institution bonds tightened on Monday, saying that the market for new issues could re-open by the end of this week, with some market participants predicting a barrage of issuance over the next two months.

“This was clearly not a half-hearted measure and it has been very constructive,” said one investor. “If you inject this much liquidity it will take the pressure off for banks as it implies interest rates will not rise, and means Libor will also normalise.”

The effect of the rally ...

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