Fed: Senior Credit Officers Again See Little Change in Terms

WASHINGTON — Senior credit officers again reported little change in terms in the latest quarter but some found that beginning with the taper scare in late May, dealers saw less liquidity in the Treasury market, the deepest and most liquid of the credit markets, the Federal Reserve said Thursday.

In the many questions posed across asset classes and sectors, most responses leaned toward the side of some decreased activity, although in the context of no major change.

Of 22 institutions surveyed, eight said liquidity for Treasuries "deteriorated somewhat" and another three found the deterioration to be considerable.

Breaking down who was affected, half the institutions found hedge funds and to a lesser degree real estate investment trusts, mutual funds and ETFs were affected.

Four out of 22 responding institutions also reported some deterioration in liquidity in the high-grade corporate bond market through early July. Answering another question, 12 of 20 respondents found liquidity and functioning in the market for high-yield corporate bonds got less liquid.

The survey of conditions in June through August was conducted between August 21 and September 3.

"Responses to the September survey generally suggested little change over the past three months in the credit terms applicable to most classes of counterparties covered by the survey," the report said.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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