Encouraging Signs

The credit crunch isn't over yet, but there are a number of positive signs in the commercial paper market. Fed data show that commercial paper rose for the first time in the last two months (by $4.5 billion) although it has dropped by a total of $364 billion during the period. Asset-backed paper continues to decline, but the weekly decline has shrunk to $6.1 billion -- the smallest decline since the credit crunch hit back in August. Meanwhile, non-asset backed paper has posted two straight weekly gains. Commercial paper rates show the improvement. The 30-day commercial paper rate has dropped to 4.88 percent, below the levels prior to the onset of the credit crunch. And the spread to the 30-day Treasury has narrowed substantially, by 160 basis points from the peak.

Bear Stearns Sees Debt Recovery Since Fed's Rate Cut

Oct. 4 (Bloomberg) -- Bear Stearns Cos., the securities firm hit hardest by the collapse of the subprime mortgage market, said debt-market conditions have improved and a recovery is under way.

The availability of credit has increased since the Federal Reserve lowered its benchmark interest rate on Sept. 18, Bear Stearns President Alan Schwartz said today at an investor conference in New York.

"Things are getting better," Schwartz said. "Liquidity has improved..."

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