The credit markets saw only scant signs of improvement Friday, with lawmakers still debating the bailout plan that would take $700 billion...

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NEW YORK — The credit markets saw only scant signs of improvement Friday, with lawmakers still debating the bailout plan that would take $700 billion of risky assets off troubled banks’ books.

The credit markets are where corporate borrowers go to find loans. The downfall of so many large U.S. financial institutions has made many traditional lenders afraid to lend now, or unable to do so because of capital restraints. So they are either charging very high borrowing costs or refraining from lending at all.

If the bailout goes through, there will likely be a relief rally, said Stu Schweitzer, global-markets strategist at JPMorgan Asset Management, during a conference call Friday. But no one is sure what will happen after that.

“People are worried there are going to be more big shoes to drop,” Schweitzer said. “That fear has been rampant in the market.”

The London Interbank Offered Rate, or LIBOR, for overnight dollar loans fell to 2.31 percent from 2.56 percent on Thursday — not far above the target federal-funds rate of 2 percent. Both rates are overnight, bank-to-bank lending rates; a decline indicates it’s slightly easier for banks to obtain very short-term loans.

But banks appear less willing to make loans to one another for longer periods. The one-month dollar LIBOR was only slightly lower at 3.70 percent from 3.71 percent Thursday, and the three-month dollar LIBOR slipped marginally to 3.76 percent from 3.77 percent. More than half of adjustable-rate mortgages are tied to LIBOR.

Another gauge of the credit markets was only slightly improved Friday. The 3-month Treasury bill’s yield rose to 0.87 percent from 0.72 percent late Thursday. The discount rate was 0.86 percent. Treasury bills are regarded as the safest short-duration assets; when their yields rise, it’s an indication that investor confidence is stable, if not improving.

Total commercial paper outstanding sank by $61 billion to $1.7 trillion in the week that ended Wednesday, according to the Federal Reserve. Not seasonally adjusted, total commercial paper outstanding fell by $44 billion to $1.64 trillion.

Another reason investors have bought up T-bills is anxiety over the security of money-market mutual funds after the Reserve Primary Fund “broke the buck” last week, meaning that the fund’s assets no longer covered each dollar invested in it.

“It’s not about yields right now,” said Irina Simmons, treasurer of Hopkinton, Mass.-based data-storage specialist EMC. EMC has scaled back its auction-rate securities holdings by about three-quarters since the end of last year.

“We’re quite happy to have very liquid cash in very short-term investments and we have the ability to react … in case things get really bad,” Simmons said.