Debt out of favour

Complaints from the clearing banks at the time of their results last week that their customers are unwilling to take out new borrowings were confirmed by the Bank of England. A pre-released article from the quarterly bulletin said companies were showing 'very little inclination' towards debt finance, and blamed this on experience of high debt during the recession. In the first quarter of this year companies raised pounds 4.7bn from the capital markets but repaid pounds 5.2bn to banks. The Bank said large companies were in a strong position but small ones may be in difficulty for some time.