voa economic report - Will Credit Risk Weigh Down Debt Markets?

Fill in the blank with one suitable word

Century

Liquidity

The

This

always

banks

buyers

by

carmaker

carry

companies

company

concerned

costs

danger

early

equity

failure

flight

had

have

interest

investments

investors

involving

of

on

only

part

raise

rate

repaid

sold

stock

the

this

thousand

to

twelve

up

which

is the VOA Special English Economics Report.

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

Liquidity can also suggest the ease with money can be raised in debt markets.

And is where concerns are being raised. Offering credit carries some risk that the loan will not be . Now experts are saying that investors are as about debt risk as they have been since two one.

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

bond offering was part of a deal by private company Cerburus Capital Management to buy Chrysler from German Daimler. Reports say the deal is not in . But it could mean an increase in borrowing .

American markets are not the ones in which banks are having trouble selling bonds. American private equity company Kohlberg Kravis Roberts hoped to over ten billion dollars in bonds. This was of a deal to buy Alliance Boots, a European that sells medicines. But a group of banks to postpone the sale because of a lack of .

Conditions for big deals by private equity appear to be cooling. Private equity companies depend liquid debt markets to lend them money. And are less willing to put money into debt securities.

Part of this is the flight from risk investments based on subprime home loans. These loans lower than average credit quality but also pay higher rates. Credit rating agencies are now recognizing that based on subprime home loans are riskier than investors thought.

Too many high-risk loans were blamed for the of the nation's second largest subprime lender. New sought bankruptcy protection from its creditors in April.

Investor from risk means that debt market liquidity could dry as interest rates rise. But it is too to tell.

The Federal Open Market Committee the Federal Reserve did not change the federal funds when it met on Tuesday. The important interest remains at five and one fourth percent.

And that's VOA Special English Economics Report, written by Mario Ritter. I'm Faith Lapidus.

SCORE: