With banks still reluctant to lend, corporations that have delayed borrowing during the recent turmoil in the credit markets may have little choice but to issue debt in the coming months, putting further pressure on credit spreads, analysts say. Six months after the credit crunch began, corporations face the realization that liquidity is much more of a strategic priority than in the past. Texas Competitive Electric Holdings, a subsidiary of Dallas-based power producer TXU, returned to the high-yield bond market in November to place a total of $3.75 billion in two issues after issuing $7.5 billion in a three-part note offering in October. The proceeds will fund TXU's leveraged buyout by a group led by Kohlberg Kravis Roberts and TPG.
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