The credit crunch continues to influence bank balance sheets and is also affecting corporations who rely on bank debt for refinancing purposes, says Fitch Ratings in a special report issued today.

The report says that as a result of the credit crunch, Fitch’s ratings and analysis of corporate liquidity in the leveraged finance market will be weighted more heavily toward internal sources of funds, including cash holdings and cash generated from operations.

Fitch says that it has been taking a more circumspect view of unused bank revolving capacity due to the banks’ response to tighter credit conditions. As a result, the rating agency will continue to highlight potential covenant violations in its rating actions and commentary, and is likely to be more aggressive in taking actions where liquidity over the near term is reliant upon the forbearance of banks.