Standard & Poor's analysts see signs of stability returning to distressed global credit markets, which were jolted in August by fears over the US mortgage market, a report showed on Thursday.
The S&P analysts said the credit markets appeared to have been soothed somewhat by the resilience of major banks to weather the financial storm that recently rocked global markets.
"At the root of Standard & Poor's belief that the credit markets may be calming down is the continued strength of diversified financial conglomerates," S&P credit analyst Diane Hinton said in the report.
Financial firms often advise investors not to stuff all their eggs in one basket and the S&P report suggested some banks had weathered the credit downturn because they had diversified their holdings.
The report noted that four US broker-dealers -- Goldman Sachs, Morgan Stanley, Bear Stearns and Lehman Brothers -- had unveiled better-than-expected third quarter results last month despite their exposures to troubled loans and ailing mortgage-backed securities.
Concerns about the US' stricken mortgage market exploded in August as several large banks and financial firms revealed large losses tied to mortgage-backed securities.
The subsequent fallout, which triggered sharp falls on global stock markets, forced many banks to tighten their lending standards, which in turn sparked a credit crunch.
Some voiced fears that a major bank or hedge fund would collapse amid the turmoil, but that has yet to happen despite losses of billions of dollars related to mortgage-backed securities.
The credit squeeze was exacerbated as banks found they could not sell the mortgage securities they were holding, and the Federal Reserve was forced to intervene in the banking system to stop the US credit market from gumming up.
The S&P report said access to central bank funding helps large financial institutions survive such market shocks, as well as other credit facilities they operate.
S&P analyst Tanya Azarchs said if the perceived "fragile stability" holds, it will increase the odds of a so-called soft landing for the economy from the credit freeze.
The credit crunch nonetheless has bruised major banks.
Citigroup Inc, the US' largest banking group by market value, warned on Monday that it foresaw a sharp fall of around 60 percent in third quarter profit due in part to failed mortgage investments.
And Swiss banking giant UBS warned on Monday of asset write-downs of 4.0 billion Swiss francs (US$3.4 billion), largely due to hedge fund losses, but also stemming from its investments in mortgage-backed securities.
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