The prices of the most traded risky European and US loans have reached their highest levels for more than a year, in a further sign of improving conditions in credit markets.

Over the past week, European leveraged loan prices reached 89.11 per cent of face value, a high not seen since July 10, 2008, according to Standard & Poorâ??s LCD and Markit.

The same is true for riskier US loans, for which the average price bid rose above 90 per cent of face value for the first time since June 24, 2008.

Growing confidence in an economic recovery was further highlighted by a fall in a key barometer of financial stress, the spread between three-month dollar Libor â?? the rate banks charge each other to borrow â?? and three-month US Treasury bills. This so-called TED spread fell to its lowest level for two years on Monday â?? 29.3 basis points â?? having reached a high of 464bp last October.