Basel II likely to boost credit markets, says Fitch

The Basel II capital Accord is likely to boost credit market funding activities, particularly for lower investment-grade companies seeking financing, according to Fitch, the credit rating agency.

Fitch senior director Kim Olson said there should be a shift away from bank loans, with more companies issuing bonds, especially if “there is investor appetite for such exposure”.

Basel II aims to achieve a closer alignment between regulatory capital and underlying economic risk. Current Basel rules impose a flat 8% requirement for all corporate exposures, regardless of risk. Basel II, due for implementation in late 2006, proposes that the level of required regulatory capital should adjust

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