Financial analysts are debating the impact that the fiscal cliff will pose for debt markets. Debt markets throughout the country were forced to shut down during the fallout from the 2008 financial crisis. Australian investors looking to purchase debt instruments were forced to look at options through markets overseas.
Others investors were forced to flock to equity securities. Over $100 billion worth of new equities were sold during the aftermath of the financial crisis.
They are concerned that a similar situation will arise if the United States goes over the fiscal cliff, but KPMG restructuring advisor David Heathcote believes those fears are unfounded.
Heathcote admitted that he is still researching the possible consequences of the fiscal cliff. He admits that he still doesn’t know exactly how the situation will play out. However, he doesn’t expect that the debt markets will be shut down as they were during the financial crisis.
Heathcote said that investors are still looking for reliable places to invest. Even if the liquidity markets in the United States are forced to shut down, he believes the markets in Australia will remain intact. He said that Australia is regarded as a safe haven and likely to sell debt even if global investors are too nervous to purchase U.S. treasuries.