A sign of the times

Cast your mind back to the autumn of 2008 when the world’s financial system appeared to be on the brink. Financial stocks tumbled. The Goldman Sachs share price for example went from $235 in October 2007 to $53 by November 2008.

Markets have moved on and this week JP Morgan tapped up investors for $1.25 billion by issuing bonds. The bank managed to issue this corporate debt at an interest rate of 5.4% over 30 years making it the lowest coupon achieved by a US bank since Dealogic started monitoring the market in 1995.  

Compare the JP Morgan rate to government debt and you’ll see how the financial crisis has evolved. Investors might still be worried about the financial system and many of the businesses within it, but they are more worried about states.

It is a sign of the times that Italy is currently paying over 6% to borrow, highlighting the shift from companies to state, a theme which 2011 will no doubt be remembered for.

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