Here is the 4-week moving average of primary dealer positions in corporate bonds. In spite of a slew of new issue activity, inventories are continuing to shrink as banks cut balance sheets in anticipation of Dodd Frank and Basle-III. Inventories are now at 2002 levels, when the overall corporate debt market was much smaller. As discussed before, this will hurt liquidity, particularly for medium and smaller sized issuers. In the future some companies may even be shut out of the corporate debt market altogether. This is not a great development for US economic growth.
|Source: NY Fed|