Is the market equipped for the next LTCM?

The sudden widening of credit spreads after a lengthy bull run has left many investors wondering whether the market could withstand a seismic shock to the system along the lines of 1998’s meltdown. Saskia Scholtes reports

For corporate bond investors, the first quarter of 2005 got off to an unassuming start. The primary market remained subdued, with a paltry sum of new non-financial supply being issued, while spreads in the secondary market continued their steady tightening trend. But by March, the tone of the market had taken a dramatic turn, with traders’ screens flashing with a succession of negative headlines: spiking oil prices, inflationary concerns, a sharp increase in leveraged buyouts and further