This improvement is clearly evident in the low default rate on corporate bonds and the relatively few delinquencies that have occurred on business loans at commercial banks: Both have dropped markedly since 2002 and have remained close to their historic lows during the past couple of years.
Likewise, risk spreads on corporate bonds - the gap between yields on corporate bonds and comparable-maturity Treasuries - narrowed from their peaks in late 2002 to low levels in early 2004. Since then, they have hovered around fairly low rates, suggesting that investors continue to have a favorable outlook for corporate credit quality.