Credit markets ‘worst in 47 years’

Central banks seem to have their work cut out if they are to restore normality to global credit markets. The famed head of Legg Mason, Chip Mason, who manages over $100 billion of assets, and is one of the world’s largest money managers, said yesterday that ‘credit markets are in the worst state he has seen them in his 47 years in the business’. ‘I have not seen anything like this’, added Mr Mason.

As I discussed back in August, when the current crisis began, companies with high leverage are obviously at great risk if current credit markets conditions continue. By now, many Finance Directors will have already completed their own in-depth assessments of credit risks. Sales people should therefore not be surprised if ‘cash before delivery’ soon becomes the norm for some companies. This may seem a harsh requirement, and may lose some sales in the short-term, but it is far better than standing in line for repayment after the worst has happened.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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