Risk Europe 2003: High credit volatility is here to stay, says Lehman’s Rieder

The high volatility of the US credit markets witnessed in the past couple of years will become a permanent market feature in the future, according to Rick Rieder, head of global credit at Lehman Brothers. Rieder, a keynote speaker at Risk ’s eighth European risk management conference in Paris today, said he believes this phenomenon in the US is equally applicable for global credit markets.

The dramatic decline over the past couple of years in equity hybrid capital-raising through convertibles, the effective 'closure' of the commercial paper market and a drop-off in syndicated loans – particularly those lasting a year or longer – has meant corporates have little option but to tap the term market to meet their financial needs.“It has permanently enhanced the potential for credit volatility,” Rieder said. He believes this would be the case even stripping out recent corporate