The global wave of government bank rescues and efforts to clean up hundreds of billions of dollars of toxic debt may give some comfort that the financial system is finally climbing out of a very deep hole.

Not quite yet.

Bloomberg News has a sobering report about the impact that a deterioration in corporate bonds is having on $1.2 trillion in collateralized-debt obligations tied to corporate debt. (What's a C.D.O.? Click here for a look at mortgage-tied C.D.O.'s.)

Credit markets around the world were rocked by the September bankruptcy of Lehman Brothers. The sweeping moves by the Treasury to buy assets and invest in banks and by the Federal Reserve to back money markets and banks has gone a long way toward easing stresses in many of those markets.

Yet, "repair and rehabilitation may be occurring elsewhere in the credit markets, but it does not seem to have spilled into the corporate bond market," notes John Jansen on Across the Curve.

The weakness in credit debt spells losses for structured investments tied to them and the banks and other institutions that hold them. Losses "may spark the next round of write-downs on C.D.O.'s after $660 billion in subprime-related losses," says Bloomberg, citing Barclays Capital.

"We'll see the same problems we've seen in subprime," Alistair Milne, a professor in banking and finance at Cass Business School in London, told Bloomberg.

How deep will these markdowns be?

Bloomberg quotes a derivatives strategist who says that some synthetic C.D.O.'s, tied to credit-default swaps on corporate bonds, are trading at less than 10 cents on the dollar.