Corporate borrowers' confidence in economic growth had ebbed to a two- year low a month before financial markets nosedived, a new survey reports.

For its second-quarter survey, Phoenix Management Services Inc. asked lenders at the end of July how many of their customers expected strong growth in the next six months to a year. Lenders said just 13% of customers expected such growth, compared with 44% in March. Results of the survey were released last week.

What makes the results significant is that the survey was done before the most calamitous of the year's political and economic events: a steep decline in world financial markets and the release of seamy details in a White House sex scandal.

"This survey was done just two weeks after the (Dow) recorded its record high and before Boris Yelstin turned into a bottle of vodka," said E. Talbot Briddell, Phoenix's president. "I would suspect optimism is down even further."

If so, it would depress what had been flagging hope in the loan market in July. The survey found that 47% of lenders planned to reduce their exposure to retail borrowers, compared with 27% in March.

Nearly one-third, 32%, expected to reduce lending to technology companies, compared with 8% in the first quarter.

In fact, lenders said, they were less likely to extend credit to every major sector in the survey: real estate, utilities, agriculture, construction, start-ups, and mining.

"This is an affirmation of what we've heard in recent weeks," Mr. Briddell said. Economists are declaring the bull run over and "the leading indicators are down for the first time in memory."

So what does it all mean for corporate finance?

"There's a lot of uncertainty," said Chris Ryan, head of sales and loan distribution at Lehman Brothers. "Things have been very busy for us, but everyone's watching the (loan) market to see what's going to happen."

Other bankers are more skeptical. "I don't think most people see a credit cycle winding to an end," said the head of syndications at a top 10 lender. "But banks are concerned with ROE, especially in light of foreign banks pulling back and all of the loans for sale in the secondary" market.

Mr. Briddell said he believes lending will continue to slow. Through the first half of 1998, domestic syndicated lending was $507 billion, down 3.6% from a year earlier, according to Securities Data Co.

"The predominant feeling out there among lenders is that it's going to get ugly in January," Mr. Briddell said. "That's the feeling on when the recession will hit."

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