A shift in investors' risk appetites and a move to wider interest-rate spreads may indicate that the availability of "cheap capital" observed in recent years may be "nearing an end or at least taking a pause," according to a recent report by Standard & Poor's New York-based primary-credit analyst William M. Wetreich. Also, if banks are stuck holding debt on leveraged buyout (LBO) deals they had planned to syndicate, their flexibility to invest in new deals is reduced, thereby shrinking the pool of liquid capital. One energy private-equity veteran says the word from New York is that debt-dealers have gone on vacation. This is the case with the broad market, but not as much with the energy market, he says; however, the situation does still affect energy companies' access to debt capital right now. S&P reports that investors' growing risk aversion, and a reducing in capital liquidity, may cause some E&P companies that are seeking financing deals to accept more costly capital or upgrade their credit measures before looking for capital for acquisitions or organic growth. For more on this, see the September issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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