Capital Markets

Survey: Finance Execs See Short-Term Credit Easing

Although recent actions by the Treasury and the Fed have loosened lending, borrowed money is still hard to come by.
David KatzOctober 21, 2008

Seventy-five percent of 1,000 senior finance and treasury pros responding to a new survey by the Association for Financial Professionals believe that the credit markets have settled down.

Still, a quarter report that their companies are still experiencing very limited access to new or additional short-term credit. And 22 percent said that the tight credit markets over the past month have stalled growth opportunities.

The respondents were especially grim about the economy. Ninety-seven percent of the finance pros, who were surveyed in Los Angeles at the AFP’s yearly conference on the current state of the short-term credit market, think the U.S. economy is in recession, and 34 percent believe that the recent turmoil in the credit markets precipitated it. Sixty-three percent believe that the United States was already in recession before September’s events.

Overall the financial professionals gave positive marks to the government’s attempts to improve the outlook for short-term credit, with 69 percent thinking that the Treasury’s purchase of preferred shares in U.S. financial institutions will improve corporate access to short-term credit and 81 percent citing the Federal Reserve’s plan to back commercial paper and guarantee money-market funds as a reason to think access will improve.

The recent government actions have led some finance executives to be more comfortable about investing outside of Treasury securities. Thirty-one percent said that they’re more at ease about re-allocating at least some of their short-term investment portfolio into other high-quality investment vehicles that offer higher yields.

Conducted yesterday, the survey generated 1,060 responses from senior finance and treasury executives from a broad range of companies with annual revenues over $500 million, according to AFP.