Until September, while the cost of borrowing for banks and low-rated corporates had increased, it had been the case that the most highly rated corporations had not experienced a significant rise in borrowing costs. That has now changed, with spreads for even AAA-rated corporates rising sharply. Likewise, spreads for emerging market sovereigns have increased significantly, for the first time in this episode.
It is not surprising, then, that formal forecasts made by bodies such as the IMF have been in a state of almost continual revision. Their latest incarnation, as released for the annual meeting of G-20 finance ministers and central bank governors recently in Brazil, is for the weakest performance in the G7 group of countries for many years.