talking with bankers..............

Had interesting drinks with some banking contacts of mine yesterday. Feel from the credit market:

1) Credit crunch is very wide ranging
2) There is a massive drive for deposits - interbank lending very tight - comparatively low volumes available for lending - as a result it is all about yield on limited debt available
3) Credit culture is back - risk being assessed more thoroughly - de-risking deals is what is the driver - its all abut de-gearing
4) Rates are being driven back up

My take on their comments as regards CNP are as follows:

1) rates will no doubt be much higher - this will affect CNP's earnings
2) reduction in debt is crucial - so banks will want aggressive debt reduction programme - so they can lend out elsewhere at higher margins - in CNP's case this will mean reduction is assets and therefore earnings
3) with a tight credit market there will need to be regular reporting back to credit committees - so 12 months extension is in the balance to say the least - more likely to be 6 months - if debt is catergorised as over risky more regular reporting is the norm.

Before you ask none of them would comment specifically on CNP - and as many are actual mates I did not seek to push them and compromise their positions - but the overall feel was that if debt serviceability was there it would be a done deal at much higher margins and regular reporting.

PT