According to the Federal Reserve, U.S. asset-backed bonds saw its biggest weekly contraction in two months and stands at its lowest level since mid-December.
Following a decline of $2.9 billion last week, the market for outstanding short-term bonds backed by mortgages, car loans and credit cards fell further to $10.8 billion this week. In total, asset-backed commercial paper (ABCP) is worth $767.1 billion, down from a peak of $1.2 billion in July. For its fourth consecutive week, the broader bond market also shrank and now stands at a value of $1,785 billion.
Investors have fled the ABCP market since the credit crunch and that in turn has hurt bank-sponsored entities that relied on short-term funding. The value of mortgages and other assets used in the market has only worsened.
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