It is too early to call the end of the credit crunch but evidence that the crisis is not worsening, if not starting to ease, was in abundance last month. If March marked the lowest point in the financial crisis, the first half of April gave ample reasons to believe that sentiment is improving – at least in the short term.
Mark Bamford, head of syndicate at Barclays Capital, explains that the tone has improved both in New York and in London’s primary markets. "I’m not saying we are out of the woods but markets are now exhibiting a normal level of anxiety," says Bamford. "Now we are getting differences in opinion, instead of the universal negativity that was prevalent before."
Bamford says that two big issues have been hanging over the debt markets in recent months. First, there were questions about the capital adequacy of many banks and, second, widespread fears about liquidity. Action to alleviate these fears has started to have an impact on market confidence. The former via the sustained capital-raising by those banks that have announced big impairments, the latter by concerted and sustained central bank action.
| US sub-prime index prices continue to fall |
| Triple-B index points to further CDO write downs |
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| Source: Markit |
Washington Mutual, Wachovia, Lehman Brothers, HSBC and Royal Bank of Scotland have all raised capital, or revealed an intention to do so.