Will Credit Risk Weigh Down Debt Markets? (1/2)

Liquidity is the ease with which an investment can be sold and turned into money. For example, when a stock is traded easily, the market for it is said to be liquid.

Liquidity can also suggest the ease with which money can be raised in debt markets. And this is where concerns are being raised. Offering credit always carries some risk that the loan will not be repaid. Now experts are saying that investors are as concerned about debt risk as they have been since 2001.

One way to measure investors' concern is by their willingness to buy new debt investments. Recently, banks, led by J. P. Morgan, postponed the sale of twelve billion dollars in bonds for the carmaker Chrysler.

The bond offering was part of a deal by private equity" class="hjdict" word="equity" target=_blank>equity company Cerburus Capital Management to buy Chrysler from German carmaker Daimler. Reports say the deal is not in danger. But it could mean an increase in borrowing costs.