Sept. 6 (Bloomberg) -- The global credit rout sparked by the U.S. subprime mortgage slump may leave as much as $34 billion of leveraged loans for railroads, tollways and similar projects ``paralyzed,'' said analysts at Standard & Poor's.

Banks are less likely to lend to infrastructure projects after being saddled with as much as $332 billion of unsold leveraged loans, the S&P report said.

``With the credit cycle turning, loosely structured and highly leveraged acquisition loans are looking shaky,'' wrote Mike Wilkins, a London-based analyst at S&P, in a report published today. ``Risks are likely to be exacerbated as credit markets become increasingly volatile and investor confidence fragile.''

Banks last year financed the takeover of U.K. airport operator BAA Plc by Grupo Ferrovial SA, a Spanish construction company, and the acquisition of Associated British Ports Holdings Plc by Goldman Sachs Group Inc.

Just as the credit boom last year enabled private equity firms to borrow on easier terms, infrastructure funds also benefited from fewer restrictions, or covenants, S&P said.

``Crucially, the high debt multiples usually associated with project-finance transactions have been adopted in conjunction with the relatively flexible controls, hurried due diligence and weak security packages more common in LBOs,'' the report said.

This type of financing has been used in the past 18 months for assets ``not traditionally considered as infrastructure,'' such as German highway rest stop chain Autobahn Tank & Rast Holding GmbH which was acquired by London-based financier Guy Hands's Terra Firma in 2004, according to the report.

The infrastructure market is ``still working well and is a safe haven compared to other parts of the credit market,'' said Pierre Nicoli, managing director in infrastructure finance at BNP Paribas in London. ``It's true there have been high multiples in some recent acquisitions but the deals are still doing extremely well.''

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

Last Updated: September 6, 2007 09:10 EDT