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Banks face $7 trln debt maturities by end 2012

Source: Reuters - Wed 25th Nov 2009

As much as $7 trillion of debt piled up by banks falls due by the end of 2012, which could force them to refinance their borrowings at higher cost, the Wall Street Journal said, citing a Moody's Investors Service report.

A further $3 trillion comes due by the end of 2015, the paper said, citing the report.

Banks took extra debt onto their balance sheets during the credit-market boom that began in the middle of the decade and lasted until the bust in 2007.

When the credit crisis struck, they were propped up by government guarantees that enabled them to keep selling debt,but with much shorter maturities, the paper said.

Moody's report showed that U.S. banks have seen their average debt maturities drop to 3.2 years from 7.8 years in the past five years, the paper said.

The Moody's report did not include any data on specific banks, the paper said.

However, the paper reported that large banks such as Citigroup Inc and Bank of America Corp have said earlier that they expect no problem refinancing debt at affordable rates and that they have historically high levels ofcash to cover maturing debt.

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