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Banks' Borrowing Rates Climb

By Jim O'Neill,  Newser User

Posted Nov 16, 2007 1:57 PM CST
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(Newser) – Financial institutions are paying more to borrow money than the average company for the first time in over a decade, reports Bloomberg, as investors fear the $50 billion in subprime losses the big banks have reported so far is just the tip of the iceberg. “We've only seen the estimates of the losses,'' said one analyst, adding that the credibility of banks and brokers is in question.

Yields on financial institution bonds were 1.49% higher than T-bills, matching 2002 record highs, as perceived risks increase. Corporate bonds yield an average 1.34% more than treasury bonds, reports Merrill Lynch. And the wave of subprime writedowns is still swelling, as Citigroup said recently it may add $11 billion to the $5.6 billion it’s already posted.

Pedestrians pass a Citibank branch office Monday, Nov. 5, 2007, in Chicago.
Pedestrians pass a Citibank branch office Monday, Nov. 5, 2007, in Chicago.   (Associated Press)
The Citigroup Center is shown on Monday, Nov. 5, 2007 in New York.
The Citigroup Center is shown on Monday, Nov. 5, 2007 in New York.   (Associated Press)
The Citibank logo is shown on a branch office in this April 11, 2007 file photo in New York.
The Citibank logo is shown on a branch office in this April 11, 2007 file photo in New York.   (Associated Press)
People arrive at the Merrill Lynch building on a rainy morning on Thursday, Nov. 15, 2007 in New York. John Thain, CEO of NYSE Euronext, was chosen on Wednesday to lead Merrill Lynch effective Dec. 1. The Merrill Lynch bull logo is printed on the umbrellas carried by the car...
People arrive at the Merrill Lynch building on a rainy morning on Thursday, Nov. 15, 2007 in New York. John Thain, CEO of NYSE Euronext, was chosen on Wednesday to lead Merrill Lynch effective Dec. 1....   (Associated Press)
A man checks his PDA outside the headquarters of Merrill Lynch & Co., Wednesday, Nov. 14, 2007, in New York. The company has tapped New York Stock Exchange head John Thain to lead the world's largest brokerage through the unfolding credit market turmoil. (AP Photo/Jin Lee)
A man checks his PDA outside the headquarters of Merrill Lynch & Co., Wednesday, Nov. 14, 2007, in New York. The company has tapped New York Stock Exchange head John Thain to lead the world's largest...   (Associated Press)
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T-Bills seen as safe haven
Associated Press

More writedowns are coming
Associated Press

 
subprime mortgages • bank • corporate credit

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