Fitch Ratings does not believe that the failure on the part of selective issuers in the energy sector to roll over full commitments on their existing bank revolvers presents a near-term liquidity issue, according to a new report. Curtailed commitments have generally been small and many bank lines have five-year terms.

The ongoing credit crunch and heightened caution among banks in extending credit to the corporate sector have resulted in some energy companies having difficulty in rolling over all of their commitments on bank revolvers under existing terms. Selective reductions have generally been occurring among investment-grade rated rather than high-yield rated issuers, and among unsecured as opposed to secured revolvers. Furthermore, expansions have taken place at a number of high-yield refiners, possibly aided by banks' comfort with the value of their security packages, as well as wider spreads for high yield versus investment grade issues.

"The runaway oil and gas price environment provides the energy sector with one of the most robust cash flows among corporates," said Mark Sadeghian, Director, Fitch Ratings. "By extension, energy carries relatively few credit concerns for banks."

Fitch believes a longer-term risk could exist in the fact that if the trend continues, borrowers may be forced to either seek out new syndicate members to replace existing ones, or renegotiate new credit on more expensive terms.