After dropping by a third this year, the bond market is gradually picking up again - but progress is slow. Jules Stewart reports.
Debt syndicate desks will be watching anxiously over the next few weeks and hoping that the recent rally in the bond market will continue into 2003. Nobody is looking for a banner year in terms of issuance, given the current level of investor resistance due to fears of credit deterioration - the main factor behind this year's 30% drop in the market compared with 2001. Many investors took a highly conservative funding position, going into sovereign bonds and cash-type instruments rather than the riskier end of the corporate sector. It is worth bearing in mind that the market is gradually recovering from one of the worst crises in recent years. Even during the calamitous days of the Tequila or Russia crises, the markets managed to rebound quickly. This time it has taken a lot longer, and the end is not yet in sight.