a relatively stable condition in credit?

credit indicators in recent days have signaled relatively stable conditions. one highlight is last week's issuance of high-yield bonds, which, according to bloomberg, moved to their highest level in many months, with seven high-yield companies selling bonds, the most since last september.

an important development of late has been the stabilization in swap rates, which, as noted last month, since last summer have coincided with major developments in the financial markets. for example, there have been three major peaks in swap rates since last summer, each followed by 1,000-point gains in the dow.

swap rates reflect the interest rate that is paid when swapping out of a floating-rate debt obligation into a fixed-rate debt obligation. debtors swap into fixed-rate obligations when they are worried that credit spreads might widen, causing swap rates to rise.

commercial paper rates have been stable; the rate paid on 30-day asset-backed commercial paper is today at 2.93%, down 14 basis points since the end of march. while the yield spread between commercial paper and the fed funds rate remains elevated (68 basis points), it has been stable for about a month. the widest spread for this metric was 191 basis points in december. the libor offered rate has behaved similarly but is more problematic in the european banking system.