The Oil Drum: Credit markets: ‘Don’t panic’, they beg

The price of corporate loans in the secondary market – i.e. on the market where banks trade IOUs from corporations is plummeting.

If you have a contract that says that a company owes you 100, you can usually sell it (to other banks or financial investors) for 100 or thereabout – a bit more if the buyer thinks the interest rate on the loan is really good, or a bit less if it thinks the interest rate is not quite enough to cover the risk that the company might go bankrupt before paying its debt back.

This is a credit crunch.
Much more after the jump to The Oil Drum.