video transcript

Credit has been cheap for a long time for corporate America, allowing businesses to lock in longer term debt- and that could be the saving grace now that rates are on the rise. Moody's Analytics Ben Garber: SOUNDBITE: BEN GARBER, ECONOMIST, MOODY'S ANALYTICS (ENGLISH) SAYING: "The commercial paper or the short term debt market are a fraction of the size of where they were before the crisis and they have a much larger portion of their total borrowings made up of longer term debt. " But credit is still a big part of how companies do business. The biggest borrowers? The finance sector. Garber says as rates rise banks could face deposits that are more expensive to attract and maintain. They will also make less in their refinancing businesses. Also relatively big borrowers: sectors like telecom and electronics, as well as utilities and energy: SOUNDBITE: BEN GARBER, ECONOMIST, MOODY'S ANALYTICS (ENGLISH) SAYING: "Some of these heavy industrial firms in the oil and gas sector and perhaps telecom as well, they have to build up massive infrastructure that requires a lot of investment to expand their business and maintain their existing operation. So in times when the cost of borrowing goes up, they have to re evaluate what type of projects they can do." Higher rates also impact the way companies can access financing: Barclay's Michael Gapen: SOUNDBITE: MICHAEL GAPEN, CHIEF U.S. ECONOMIST, BARCLAY'S CAPITAL (ENGLISH) SAYING: " Lower credit quality firms that may suffer from a loss of market access and by that I mean rates back up. And the market is unsure now of what credits they want to take on. So there is a rate of yield question here and then there is also quantity of access. So, can I get what I want as a firm when I come to market. Borrowing in a certain size, a certain time horizon as well as a fixed or floating rate. So it affects industries in various different ways. " But he adds that higher borrowing costs are a small price to pay if its tied to the opportunities of an improving economy.