The Financial Times
is reporting that in the face of massive write-downs and big losses, "the banks' need to raise capital to offset mounting
credit-related losses is forcing them to pay higher interest rates to
entice investors."
With debt markets still tight, financial firms face an uphill battle in
trying refinance their debt at low rates, and in turn will likely raise their own rates for lending to businesses and
individuals.
The FT reported that just last week Citigroup, J.P. Morgan
Chase and American International Group borrowed almost $20 billion in
new long-term debt and paid some of the highest interest rates ever in
order to lock in funding. According to Dealogic data, 10 of the largest
bank borrowers have $27 billion of maturing bonds in August, $52
billion in September, $23 billion in October, $20 billion in November
and $86 billion in December. -- George White
See FT story
Comments
There's more bad news on the horizon for U.S. banks that will need to refinance more than $200 billion of their own maturing debt over the next few months at increasingly higher costs.
So banks have to pay more to refinance their long term debt? Guess that does not bode well for the rest of the people. Right now some are paying the highest interest ever. That will certainly trickle down to us and that is the bad news for the economy that is already down.
Evelyn Guzman
Debt Challenger