Corporations See Little Change in Finance Needs This Year; Many Companies Express Concern over Health of Banking Industry, Say They Are Monitoring Depositories More Closely

Article excerpt

CHICAGO -- Short-term financing needs for the remainder of 1985 will closely resemble the borrowing that corporations used in 1984, according to a survey compiled by Manufacturers Hanover Trust Co. and Cashflow Magazine.

But while the survey suggested that corporate banking was "business as usual," a large majority of companies interviewed expressed some concern about the health of the banking industry.

The survey was based on conversations with 615 corporations across the nation. Large companies were defined as having annual revenues of more than $150 million; 301 were interviewed. Middle-market companies were defined as those with annual revenues of more than $20 million but less than $150 million; 314 participated.

The two types of financing middle market companies listed as their most-used form of borrowing were unsecured loans, cited by 40.8%, and secured loans, cited by 38%. In 1984, 38.9% of these companies used unsecured loans and 35.7% said they used secured loans.

About half of the large corporations said they will use unsecured loans this year, slightly less than the 52.5% who said they used that method last year.

The next most popular method, not surprisingly, was commercial paper. In 1985, 33.9% of the corporations interviewed said they will use this method compared with the 32.9% who used it last year.

The survey pointed out that nearly 31% of the middle market firms and 24.3% of the large companies anticipate no short-term debt needs in the near future, which is nearly the same level as last year.

The outlook for long-term financing shows that most respondents forecast no new or increased debt for either large or middle market corporations over the near future. Of the middle market corporations and large corporations, 54.5% and 46.5%, respectively, do not expect to take on new long-term financing instruments in 1985.

Nearly 31% of the large corporations and 27.1% of the middle market companies chose term loans as the type of long-term instruments they expected to use in the near future.

Again this shows very little change compared with the past year, when 46.3% of middle market corporations and 42.9% of large corporations surveyed said they did not take on any long-term debt in 1984.

For those corporations which took on long-term financing last year, 26.1% of the middle market firms and 28.2% of the large corporations said they had used term loans.

The ways in which these corporations used their financing breaks down according to size.

For instance, for middle market companies, about 40% said they used the funds to purchase new equipment, 26. …