Bangkok--28 Sep--Standard & Poor's
New global banking regulations are likely to create lasting effects for corporate borrowers, including potential risks such as increased credit costs and diminished access for small or comparatively risky companies, according to a new commentary, titled "New Global Banking Regulations Are Likely To Create Lasting Effects For Corporate Borrowers," published today on RatingsDirect.
"Although it likely will take several years to finalize the multitude of rules and regulations, we believe that corporate financial officers and treasurers will be focusing on changes that could affect their borrowing decisions and, in some cases, narrow their options," said Standard & Poor's Ratings Services credit analyst Gregg Lemos Stein.
"In addition, we understand that many banks have already begun to modify their business models in advance of full implementation of the upcoming regulations, as well as in response to the demands of their investors and counterparties," he continued. "In this sense, the financial system is already incorporating the new regulation, although recently improved liquidity in the public debt markets may be offsetting the effect to some degree."
Standard & Poor's noted that it doesn't expect stricter banking regulations to have an immediate significant effect on nonfinancial issuer credit ratings. We foresee potential risks evolving gradually as regulations take effect over several years. In addition, we believe most corporate borrowers will be able to adjust their funding and other financial decisions accordingly to meet these risks.
Over the next several years, however, we believe companies with less funding flexibility, including those rated at the lower end of the credit spectrum, may face greater potential for downgrades if they lose access to bank credit or are unable to find sufficient funding sources to deal with upcoming debt maturities. In addition, small and midsize businesses--including many that are unrated--may be more adversely affected because they have less ability to absorb added funding costs and more difficulty gaining access to public debt markets.
The report is available to RatingsDirect subscribers on the Global Credit Portal at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to
[email protected]. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212.438.5054,
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David Wargin, New York (1) 212.438.1579,
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Analyst Contacts:
David Tesher, New York (1) 212-438-2618
Gregg Lemos Stein, New York (1) 212-438-1730