March 14 (Bloomberg) -- The cost of borrowing on money markets may rise after Bear Stearns Cos. got an emergency bailout from JPMorgan Chase & Co. and the Federal Reserve, heightening concern global credit-market losses will deepen, according to strategists.

Bear Stearns sought funding after its cash position ``significantly deteriorated'' in the past 24 hours, Chief Executive Officer Alan Schwartz said today. The New York Fed agreed to provide financing through JPMorgan for up to 28 days, the bank said in a statement.

``This is going to increase the reluctance of banks to lend to each other,'' said Nick Stamenkovic, a strategist at RIA Capital Markets in Edinburgh. ``It means that the funding crisis in money markets is going to intensify. The fact that Bear Stearns has had to be bailed out by the Fed clearly increases concern about which other banks are in serious trouble.''

Money-market rates are rising as banks hoard cash after at least $195 billion in credit losses and writedowns linked to the U.S. subprime-mortgage collapse since the beginning of 2007. Policy makers in the U.S., U.K., Canadian, Swiss and euro-region agreed this week to inject $240 billion into the banking system in a second round of emergency-loan offerings to revive lending.

The three-month London interbank offered rate, or Libor, climbed 9 basis points to 5.93 percent today, the highest this year, British Bankers' Association said. The euro rate rose 2 basis points to 4.62 percent, the highest since Jan. 4.

Swelling Losses

Writedowns of securities related to subprime mortgages will probably swell to $285 billion, Standard & Poor's said in a report yesterday. The ratings company previously forecast losses of $265 billion. S&P raised its estimate because of increased loss assumptions for collateralized debt obligations.

The difference between the rate banks charge for three- month pound loans relative to the overnight indexed swap rate, the so-called Libor-OIS spread, showed a decrease in the availability of cash for borrowing. The spread widened by 11 basis points to 79 basis points, the most since Dec. 18. It averaged 10 basis points in the first half of 2007.

``This panic is another sign that the credit crisis is far from over,'' said Nathalie Fillet, a senior interest-rate strategist in London at BNP Paribas SA, France's biggest bank. ``Central banks can try to improve liquidity but they can't address the root cause of the problem. Banks just aren't willing to lend cash when there are further writedowns and losses ahead.''

Increased Reluctance

The so-called TED spread, the difference between what banks and the government pay for three-month dollar loans, also showed an increased reluctance to lend. The spread was at 1.58 percentage points today, within 5 basis points of the widest this year, from 1.44 percentage points yesterday.

The three-month rate for dollars dropped 4 basis points to 2.76 percent, the BBA said today.

Money-market rates began surging last year as the fallout from the U.S. housing slump and losses linked to subprime mortgages left banks wary of lending to all but the safest borrowers. A first round of concerted central bank action announced Dec. 12 temporarily eased the credit shortage at the end of last year. The European Central Bank injected $500 billion into the banking system on Dec. 18.

Carlyle Group said yesterday its mortgage-bond fund defaulted on about $16.6 billion of debt. Drake Management LLC said a day earlier it may shut its largest hedge fund.

``The banks have zipped their pockets up and money markets are clean out of confidence, as we head towards the end of the quarter with billions worth of loans up for renewal,'' David Buik, market analyst at BGC Partners in London, the inter-dealer broker controlled by Cantor Fitzgerald LP, wrote in a note to clients today. ``Over to you Mister Bernanke, Doctor King and Monsieur Trichet.''

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

Last Updated: March 14, 2008 14:01 EDT