Lending to Firms Projected to Grow 9.2% Next Year
NEW YORK -- Commercial and industrial loan volume in the U.S. is expected to grow a brisk 9.2% next year to $349 billion, according to a forecast by Loan Pricing Corp.</br></br>The projected increase is surprising, since it is higher than forecasts for growth in the nation's Gross National Product next year and greater than commercial loan growth in any of the prior four years. In 1988, commercial loan volume grew 7.2%, and estimates are that it will grow 7.6% this year.</br></br>Richard Bennett, senior economist for Loan Pricing, said, "People are going to need credit. We believe the economy has still got another year of growth in it."</br></br>Loan Pricing, a private firm that sells data on the commercial loan market, cited higher interest rates on junk bonds as one factor that is causing more borrowers to turn to short-term bank loans. The well-publicized troubles of some large issuers of high-yield corporate bonds have sent interest rates for such issues climbing to new highs relative to government debt.</br></br>Mr. Bennett said, "{Junk} bonds are becoming less and less of a way of financing."