http://co-plan.net Economic Outlooks |Stock Market |Financial |Earnings |World Market Wed, 08 Feb 2012 13:31:19 +0000 http://wordpress.org/?v=2.8.6 en hourly 1 http://co-plan.net/smaller-companies-face-pain-as-lending-continues-to-shrink/ http://co-plan.net/smaller-companies-face-pain-as-lending-continues-to-shrink/#comments Mon, 14 Sep 2009 07:32:39 +0000 admin http://co-plan.net/?p=121 The credit crunch in Europe worsened during the summer as corporate bond finance issuance failed to plug the gap left by a sharp contraction in bank lending.
Morgan Stanley, which has compiled lending and issuance data from central bank figures and Dealogic, warned that the scant availability of bank credit would penalize smaller companies that had no access to bond market.
Net lending by banks went further into negative territory in July as companies paid back more loans than took out new ones. Loans outstanding contracted by a net €25bn in the month, the fifth successive month of increasing supply shrinkage. At the same time, there was a retreat in recent record corporate bond issuance. Bond issuance in July declined for the first time ever since March, by €20bn month-on-month to €27bn, although bankers are convinced that the fall in issuance was only seasonal.
Bankers said the July trends had continued into August and would hit smaller companies hardest. Huw van Steenis, Morgan Stanley banks analyst, said that as Europe’s commercial banks de-lever, lending is likely to be squeezed.
According to Morgan Stanley, there was €319bn of corporate bond issuance in the first seven months of the year and a decline of €33bn in loans made by European banks. That marked a reversal of the balance of corporate funding from a year ago, when bank loans totaled €346bn compared with corporate bond issuance of just €119bn. Last month, the CBI, the organization of UK employers, said that large companies saw credit lines shrink.
Banks across Europe have insisted in recent months that any decline in lending is due to a fall-off in demand, not supply.
But some banks blamed a misalignment in supply and demand. Brian Robertson, group chief risk officer at HSBC, said that those companies you’d like to lend to don’t want credit and in many cases those that do, you don’t want to lend to.
Another large European lender said that banks are eager to lend money to good companies. But many of them don’t need it. We are not going to throw good money after bad on weak companies.

]]> http://co-plan.net/smaller-companies-face-pain-as-lending-continues-to-shrink/feed/ 0