Bill Gross, chief investment officer at Pacific Investment Management Co., believes that tighter lending conditions will alter the U.S. housing market for years according to his April Investment Outlook note.

The note, titled “Grim Reality,” addresses the debate in financial markets about whether woes in the subprime mortgage sector would spread more broadly in the housing market and economy as a whole. “Bulls and bears argue over Web sites as to the percentage of all lending that subprime and alternative mortgage loans provide,” Gross wrote. “But while important, the argument obscures the critical conclusion that tighter lending standards and increased regulation will change the housing outlook for some years to come,” he added.

Additionally, Standard & Poor’s Ratings Services said there has been a significant slowdown in the rate of new entrants in the U.S., as the challenging credit environment has not been supportive of new issuers or new debt offerings.

The ratings agency said in the first quarter of 2008, there were only 29 new entrants to the rated population, down from 98 in the first quarter of 2007. This is the slowest first quarter by newly rated issuers since 1991. It added with profits still at risk within a weaker economic environment, it sees a continued slide in credit quality, with downgrades outpacing upgrades in both investment grade and high yield.

S&P also said it sees an increase in the trailing-12 month speculative-grade default rate to 4.7% by the end of the first quarter of 2009.

Though credit conditions remain challenging, there have been some initial signs of improvement for corporate bond prices, both the high-yield and investment-grade markets have rallied since mid-March, the ratings agency noted.