govt, banks in talks to beat liquidity drought

Hi everyone,

Got this under another company thread. (ozl) He's hoping there's truth to it.

regards
Haplo



http://www.businessspectator.com.au/bs.nsf/Article/Local-banks-seek-govt-help-to-beat-liquidity-droug-$pd20090117-NCPZ6?OpenDocument

6:20 AM, 17 Jan 2009

Govt, banks in talks to beat liquidity drought

Billions of dollars of federal funding could be made available to local companies struggling to refinance their debts, under new measures being considered by the government.

The Rudd government has been holding talks with big local banks in an effort to prevent forced asset sales among businesses, or a business funding drought, as companies battle to roll over their debts, according to the Australian Financial Review.

The talks come as key international lenders, which provide around 60 per cent of syndicated loans to local businesses, depart the Australian market on risk aversion or, in some cases, after being nationalised. This puts pressure on Australian banks to fill the void.

The meetings were told the local banks do not have sufficient funds to refinance $70 billion in company loans that must be refinanced over the next two years, the paper said.

Otherwise healthy companies that cannot roll over their debts are often forced into asset sales at discounted prices.
Government officials told the AFR the government has not ruled out providing commonwealth funds.

Options being considered include allowing local banks to increase business lending above current risk levels, under indemnity, or to allow foreign banks to leave a local loan syndicate early if they take a discount on their repayment share, the paper said.