The credit market includes all OTC and exchange markets in a nation or region that trade corporate- and government-issued debt - longer-term in the bond market and shorter-term in the money market. The credit market has lately taken a beating as the credit crisis has frozen credit markets like mortgage-backed securities and driven up rates in others like commercial paper.
Credit markets typically consist of two sub-markets: the primary market, where government and corporations sell their debt securities (bonds, etc.) to lending investors, and the secondary market, where these securities are sold to other investors. The vast majority of credit-market trading is conducted on over the counter markets via electronic trading on the secondary market.
Some of the credit market's more obscure debt instruments like auction-rate securities issued to the OTC money market began drawing attention early in 2008 as markets in them began to freeze similarly to the mortgage backed securities market of 2007. One prominent victim of newly risk-averse credit markets has been the auto industry, whose finance arms have seen their market for collateralized debt seize up recently, restricting their ability to lend to potential customers.
- Bond Market. Financial Dictionary.
- Credit Market Bottom Nowhere In Sight. Seeking Alpha.
- Tougher credit market compounds auto industry woes. The Associated Press.