The story of the second half of 2015 is that liquidity was tightening as debt markets anticipated the first increase in the Fed Funds rate in almost ten years and both the spread between the three month bank bill and overnight indexed swap rates, and the TED spread in the US, moved over 40 basis points by year end.Long-term interest rates were less affected, as the spread between ten year CGS and US Treasuries hovered around 50 bps through the second half. Indeed, the local 3/10s bond curve flattened as ten year yields contracted through the third quarter and then again towards the end of the fourth.Nevertheless, yields on risk assets increased through most of the year, and this is the other major story of 2015 as credit spreads steadily widened. Widening credit spreads were seen in all major markets from the start of the second quarter but Australian credit risk has been seen as being greater than that of Europe or the US since the second half of 2013.Australian credit risk was increasingly seen as being determined by developments in China. Indeed, movements in the Australian iTraxx index became highly correlated with those in the China sovereign index, peaking at 96 per cent correlation for the period from the end of March to the end of September.However, that relationship was broken in the fourth quarter, with the Aussie iTraxx now sitting well wide of the China index.  The heavy falls seen in commodity prices are considered to pose a much greater risk to Australian corporates.Much of the widening in the index has been driven by increased CDS spreads for iron ore and energy producers. The five year CDS spread for BHP Billiton had widened to 181 bps by the end of the year, from 78.6 bps at the end of June.  On Thursday, it reached 253 bps and the Aussie iTraxx was at 150 bps, according to Markit.Despite an environment of increasing risk aversion, the volume of international bond issuance by Australian entities in 2015 was the largest seen since 2009, although 2012 comes close.At a total of A$136.4 billion, issuance was evenly divided between the Euromarket and US markets, at approximately A$65.8 billion each. Borrowers were able to tap the Dim Sum market for the first time, and while individual issues were small, issuance totalled more the A$1 billion for the year.Bank issuance again dominated in all international markets, accounting for more than 75 per cent of total issuance.But issuance volumes did not hold up so well in the domestic credit markets.Overall securitisation volume was down in 2015, at levels below those seen in 2013 and 2014. While mortgage lending volumes were strong for most of the year, overheating residential property markets, tightening underwriting standards in the last quarter, and widening credit spreads are the most likely cause of the lower overall volume. Prime RMBS issuance fell by more than 25 per cent but interestingly, non-conforming RMBS issuance increased by more than 14 per cent.Issuance volume was also