Corporate Financing in a Pinch

As banks and other syndicated lenders get cold feet about new deals, borrowers turn to nontraditional sources of capitaland face tougher loan terms

With the credit crunch in full swing, companies big and small are having to scramble to find financing. The usual venues for loans have dried up. Total U.S. syndicated corporate loan issuance—loans banks made with the intent to sell them off to investors—fell by more than 60% year-over-year during the second quarter of 2008, from $581.8 billion to $229.6 billion, according to Reuters (TRI). Major players, including Merrill Lynch (MER) and Deutsche Bank (DB), have all but exited the U.S. syndicated loan market, with their issuance dropping from nearly $30 billion and $50 billion, respectively, to a combined $5.5 billion during the same period.

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