Debt Capital Markets--A New World Order
The soft underbelly of the credit markets has been on display recently. With the bond market in retreat for most of the summer, banks did not pick up their historical role as lenders of last resort. The result has been a credit crunch for a wide swath of small and speculative-grade issuers. Not all issuers are suffering, of course. The asset-based lending market remains robust, and the strongest issuers can still tap banks for credit. Meanwhile, European banks have faced their own grinding rounds of consolidation, which, by and large, have left giant investment banks that play globally and small local banks that play almost exclusively in their home markets. With the growing use of portfolio management techniques and mark-to-market tools, banks are no longer the balance-sheet players of yore, but are more yield-driven players that are not available to backstop the capital markets.