Bangkok--14 Nov--Standard & Poor's The Senior Loan Officer Opinion Survey on Bank Lending Practices for July through September showed that general lending conditions continued along a constricting trend, according to an article recently published by Standard & Poor's. The report, titled "U.S. Credit Comment: Lending Standards Tighten (Premium)," says that the tightening of lending standards in the mortgage-loan market has spilled over into the market for commercial and industrial (C&I) loans. Most banks have cited uncertainty about the economy as the general reason behind the tougher C&I loan conditions. "The bond market has experienced similar constraints, as investors have demanded higher risk premiums in both the bond and leveraged-loan markets, which is particularly significant given the decline of aggregate credit quality," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "With 33% of firms rated 'B' or below, tighter lending conditions could pressure those that are already highly leveraged. As investors become more risk averse and banks become reluctant to extend credit lines, firms in distress may not be able to find financing. While the market is not yet at this point, we caution that this risk is still possible." Of the domestic banks surveyed, 19.2% reported stricter lending conditions for large- and medium-sized C&I loans, and 9.6% reported tighter lending conditions for small-sized C&I loans. Demand for C&I loans also slipped, as 17.3% reported lower demand for large- and medium-sized C&I loans, and 7.7% reported lower demand for small-sized C&I loans. The lower demand was somewhat surprising, because after the credit disruption in late August and September, some firms had to tap credit lines. Moreover, some firms that had funded through commercial paper had to turn to bank lines instead. Ms. Vazza added, "If lending standards become too strict, economic activity will suffer because firms and consumers may be unable to finance investments and purchases. However, recent federal funds rate cuts should help offset the higher loan premiums and keep borrowing costs from choking economic activity." The report is available to RatingsDirect subscribers who have upgraded their package to include the Global Fixed Income Research add-on. RatingsDirect is the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber with the Global Fixed Income Research add-on, please contact your local Standard & Poor's representative or [email protected] for further information. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. 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, [email protected] Analyst Contact: Diane Vazza, New York (1) 212-438-2760 Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 8,500 employees, including wholly owned affiliates, located in 21 countries, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com. Key Contacts: Americas Media Relations: (1) 212-438-6667 media_ [email protected] Americas Customer Service: (1) 212-438-7280 [email protected]