Turns of the cycle (TT Sep06 p22-24)

Credit market bears seem to believe that the cycle is now returning to a classic bear market. But an alternative view is we are in a stage of decent profit growth, with no further tightening in spreads until well into 2007. In the near term new issues will meet with a good response – and will be priced to sell, as dealers fret about having residual risk left on their books. Liquidity in the secondary market may remain a problem.