To the question of whether banks are lending to businesses and the flip side of what’s the demand for loans, from Friday’s Federal Reserve data for the week ended Sept 2nd, Commercial and Industrial loans outstanding fell for a 9th straight week and is at the lowest level since Jan ’08. Fortunately though for many publicly traded companies, the capital markets have filled the void of the banks in a major way as corporate bond issuance in 2009 may hit a record high. Year to date issuance for both investment grade and high yield is $927b vs full year 2008 issuance of $926b and $1.21t in 2007. Thus, if one has access to the capital markets, the spigot has been wide open for companies to both refinance and borrow for growth but for small companies that only have its banks to tap for financing the credit crunch is more apparent.
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