The London interbank offered rate that banks charge each
other for loans rose for a fourth day, driving a gauge of cash
scarcity among banks to a record. The biggest drop in financial
short-term debt outstanding since at least 2000 caused the U.S.
commercial paper market to tumble 5.6 percent to a three-year
low, according to the Federal Reserve.
The crisis deepened after the worst month for corporate
credit on record. Leveraged loan prices plunged to all-time lows,
short-term debt markets seized up and even the safest company
bonds suffered the worst losses in at least two decades as
investors flocked to Treasuries. Credit markets have frozen and
money-market rates keep rising even after central banks pumped an
unprecedented $1 trillion into the financial system.