July 28 (Bloomberg) — U.S. banks searching for hints of
credit-market distress ahead of next week’s deadline to raise the debt ceiling
are finding few signs of panic so far.
Commercial banks and securities firms are tracking how
money-market funds adjust holdings and whether participants in repo markets,
where financial firms obtain short-term financing, change terms for collateral
including Treasuries, according to executives in charge of finance operations at
five of the largest U.S. banks. They are also looking for disruptions in
commercial paper and swaps markets, said one of the people, who declined to be
identified because the deliberations are private.
Lenders are making contingency plans in case President Barack
Obama and Congress fail to reach agreement before an Aug. 2 deadline. Commercial
banks are focused on a potential downgrade to the U.S. debt rating, with a
default considered unlikely, said the executives. With less than a week to the
deadline, key market indicators have remained stable.
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