Battered US financial groups will have to refinance billions of dollars in maturing debt over coming months, a move likely to push banks’ funding costs higher and curb their profitability, say bankers and analysts. The banks’ push to raise capital to offset mounting credit-related losses is forcing them to pay higher interest rates to entice investors, which is likely to put pressure on earnings and could lead to higher lending rates. Last week, groups including Citigroup, JPMorgan and AIG borrowed almost $20bn in new long-term debt, paying some of the highest rates ever in order to lock in funding. The wave of refinancing is set to continue for several months as billions of dollars in bank debt come due.

This entry was posted by Gwen Robinson on Monday, August 18th, 2008 at 5:28 and is filed under Capital markets. Edit this entry.