Moody’s Investors Service says that the repricing of risk that’s currently underway in the credit markets will not be a quick process, but that it will eventually happen.

According to a new report from Moody’s, normal functioning of the credit markets will require a new “price consensus,” which will likely play out over the next six months.

“The markets will reopen when secondary market prices rise, or inventories are marked down enough to sell, which should eventually occur,” says Moody’s vice chairman, Christopher Mahoney, co-author of the first in what will be a series of reports that address macro issues related to the sub-prime problem and related market dislocations.

“There has never been a very deep secondary market for structured products,” says Mahoney, “but one is certain to develop and it is likely to operate initially at levels below current marks.”

He said some levered players will ultimately be forced to sell illiquid securities at low prices. This forced selling should result in the creation of a more liquid secondary market in the risky asset classes at prices below their current carrying value, he predicted.

“But, for now, there is no standard for what market pricing should be with differences in opinion among buyers and sellers,” said Mahoney. “Panic is driving a lot of the pricing and lack of confidence is painting all assets — good and bad — with the same broad brush so that, in some cases, even good collateral cannot be sold or financed at anything approaching its true value.”

Prior to a new consensus emerging on more realistic prices, Mahoney said, “it is the responsibility of the monetary authorities to maintain financial stability and to ensure that the financial markets can perform their important role in enabling the real economy to function.”