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Sunday, October 19, 2008

Rates ease but credit still freezes




Oct 19 2008 Best-Mortgage-Companies.com
Bank-to-bank lending rates went lower last Friday and demand for Treasury bills let up slightly, but there are signs companies that need credit most might not be able to obtain it.

Corporate bonds are being issued at the slowest pace in a decade, and it's been three weeks since a high-yield corporate bond has been issued.

This drought is partially due to companies sitting on the sidelines, waiting for conditions to improve. But it's also because there are not enough buyers. This is a problem, because when companies can't get funding from the markets, they have to draw down their credit facilities with their banks -- which often forces banks to jack up their rates.
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