Corporate bond markets have priced in a hard landing for the US economy in 2001. Spreads on corporate bonds versus Libor, the benchmark short-term interbank offered rate, ended the year at all-time highs, a sign that investors perceive even more risk of credit erosion this year.

The US market has strong implications for Europe, according to David Hewitt, credit analyst at Dresdner Kleinwort Benson. 'The US situation is important for the European context the corporate bond market in the US is 10 times the size of Europe,' he said.