If it ain’t broke, please Merv, don’t try and fix it

27 Jan 2009

The Bank of England’s plan to provide liquidity and bring down spreads by buying corporate bonds appears as an oddly-targeted initiative to help a sector which is already finding its feet. Its artificial intervention may actually damage the long-term health of the market.

The Bank of England’s £50bn plan to buy up high-quality assets includes corporate bonds as well as government guaranteed bank debt, commercial paper, syndicated loans and certain securitisations.

While it is clear that there isn’t exactly a surfeit of investors around for new securitised products at the moment, the ...

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