In addition, other longer-term bank funding markets remain relatively closed, as banks continue to be reluctant to lend to one another other than for short maturities, while many asset-backed securities, leveraged loan and structured credit markets are virtually inactive.
Term premia are expected to remain elevated for some time because of wider problems in the financial system such as uncertainties regarding the valuation of complex products, counterparty mistrust and continuing uncertainty about the ultimate location of mounting losses on assets linked to the US subprime residential mortgage sector.