Capital Flight to Safety

When corporate debt markets become shaky, investors often move toward safer, more familiar instruments, compressing yields in some products and tightening credit in others. Analyze how risk aversion spreads through a financial system and how banks, issuers, and regulators respond. Include the roles of liquidity, collateral, repos, duration risk, and investor psychology. Then design a resilient funding strategy for a retail savings product or bond market during a period of credit turmoil.