the great credit tightening is finally approaching on both sides of the atlantic if the latest surveys of bankers are anything to go by after delivering a fresh interestrate hike wednesday federal reserve chair jerome powell signaled that monday’s senior loan officer opinion survey which typically polls more than 80 lenders will show tightening lending standards the extent of the decline will be closely watched thank restrictive monetary policy and bank turmoil for creating headaches for borrowers across the globe from momandpops to bluechip companies over in europe appetite for corporate loans plunged by the most on record in the second quarter a faster slowdown than anticipated add new us regulations that would force big banks to hike their capital buffers by billions of dollars and a case can be made that the longanticipated stiffening of lending conditions is playing out but its economic impact is less clear noting easing demand for commercial and industrial loans the likes of citigroup inc reckon the shift in the credit cycle could cut inflationadjusted gross domestic product in the us and europe by around 1 to 2 by the end of next year “its impact on the broader economy is taking longer as the overall liquidity in the system remains robust” said marvin loh global macro strategist at state street corp referring to interestrate hikes for now fixedincome investors seem relaxed the extra yield that investmentgrade corporate debt pays pays over government bonds is nearing the lowest since just before the regional banking crisis left money managers looking for safe havens the sanguine market tone reflects the fact that recession bets have misfired all year while alternative financiers like private credit firms are stepping up “continued tight monetary policy is certainly a drag on credit extension but having the end in sight with increasing confidence can help ease that constraint” said steven kelly who researches financial crisis management at yale university “skepticism of a socalled soft landing continues but as the fed continues to do the perceivedimprobable on that front the soft landing view will only grow in acceptance” new capital requirement rules with the biggest lenders having to boost their capital requirements by 19 are also a headache for wall street the proposal which likely won’t be implemented for years is probably already having an impact according to kelly “at least at the margin the expected path of bank capital regulations also is likely weighing on new bank credit extension” he said before the official announcement earlier this week read more calm before the storm credit’s cracks widen ahead of recession any knock to the economy from credit tightening would be clearly painful for the slew of companies that have built up a mountain of debt in the easymoney years and are now facing soaring borrowing costs issuers have responded by making larger payments on their commercial loans bank of america corp chief financial officer alastair borthwick said on a call with analysts earlier this month in a note on thursday armen panossian and danielle poli at oaktree capital management state their case for why elevated interest rates are set to send defaults higher “asset bubbles created during the easy money era could deflate painfully causing a rash of downgrades distress and eventually defaults” they wrote   demand for private credit rebounded globally in the second quarter with 34 new funds raising 712 billion preqin data shows   some of the biggest buyers in the 13 trillion clo market are piling into securitizations stuffed full of private debt   banks sold 2125 billion of junk bonds and leveraged loans to fund apollo global management inc’s acquisition of aluminum products maker arconic corp   chinese conglomerate dalian wanda group repaid a maturing dollar bond following a lastminute asset sale after a dramatic week of record volatility   carlyle group extended a 200 million loan to irobot corp to help it ride out the wait until amazoncom inc gets the green light to acquire the maker of roomba vacuums in return carlyle stands to earn more than 14 a year   casino guichard perrachon sa reached a restructuring deal with creditors that will see chairman jeancharles naouri’s holdings wiped out as he cedes control to investors led by czech billionaire daniel kretinsky   sinoocean group holding ltd is seeking extensions on both domestic and dollar bond payments a reminder of the ongoing liquidity constraints in the property sector as newhome sales slump   billionaire gautam adani’s conglomerate is testing lender demand for financings that may total more than 1 billion   goldman sachs group inc’s top leveraged finance trader and partner tom malafronte is planning to depart the bank at the end of the year he joined from credit suisse group ag in 2013 and was promoted to head of us leveraged finance trading in 2019 at goldman malafronte overlapped with sam berberian who recently left citigroup inc to join citadel securities as it builds out its credit trading unit   keycorp’s investmentbanking arm named doug ingram a managing director and head of the syndicated and leveraged finance group ingram was most recently at bank of america corp where he served as head of leveraged acquisition finance   angelo gordon  co has hired tilden park capital management’s david busker to lead commercial real estate debt and promoted several credit veterans as it bolsters its structured credit platform   guggenheim partners is recruiting restructuring veteran homer parkhill from rothschild  co where he worked for more than 21 years