Banks are taking a grim view of the short-term outlook for the cost of issuing new term debt, amid talk that even covered bonds in offshore markets will be hard to sell over the last month of the year.A couple of bank chief executives provided an assessment of the state of funding markets in interview with weekend media.ANZ CEO Mike Smith told The Australian that "we are right in the middle of a pretty serious crisis right now. This has all the makings of being very nasty."Smith said: "There is a credit crunch in Europe now. It is spreading to Asia and it will spread here too."Ralph Norris, who retires this week as CEO of Commonwealth Bank, told the Sydney Morning Herald: "I don't think the GFC ever finished. We have had elevated funding costs since 2007 and now they are as high as they were at the height of the crisis."Norris said he believe that the sovereign debt issues affecting financial markets in Europe have the potential to be significantly worse than the drama that followed the collapse of Lehman Brothers in the US in September 2008.His colleague Lyn Cobley, treasurer at CBA, said in an interview with the Financial Review  that funding costs were "at almost unprecedented levels that are close to the time of Lehman. We're going to be very challenged if this environment continues".CBA and National Australia Bank have over the last week been forced to postpone their planned debut sales of covered bonds due to the difficult conditions global markets and the mixed reviews of the corresponding sales of covered bonds by ANZ and Westpac the week before last.Last week's partial failure of a German government bond auction is weighing heavily on markets, since it suggests even prime eurozone borrowers are now paying more for term debt.International Financing Review, a capital markets news service, reported on Friday that investment bankers "have all but given up hope of bringing any primary supply for the remainder of 2011 and are already in talks with issuers looking to line up transactions for the expected market opening in January."CBA and NAB may still be aiming to sell covered bonds this side of Christmas. And the International Financing Review assessment may be an exaggeration, given that four large banks from Denmark are proceeding with €60 billion in covered bond sales, with the first of these scheduled to be auctioned tonight.Meanwhile, European leaders are looking to the International Monetary Fund to boost the European Financial Stability Facility, German Finance Minister Wolfgang Schaeuble told reporters in Berlin on Friday. Dutch Finance Minister Jan Kees de Jager said IMF help must be "substantial enough to help Italy and Spain". Talks on creating credit investment funds had run into "problems", Bloomberg reported him as saying.