The structured credit market appears poised to enter a new phase of the cycle. Now that government support of financial institutions has successfully been tested, the focus of protection buyers is expected to turn to the high yield and corporate sectors.
"The market is exiting phase one of the credit crunch/bearish cycle (where the focus was on financials and there was a risk of systemic meltdown) and entering phase two (where there will be continued losses but no domino effect).
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