Global Phenomenon: Companies Draw Line of Credit

The WSJ reports that both healthy and unhealthy companies are drawing down their credit lines in an effort to bolster balance sheets in response to looming uncertainty and declining revenues. The article cites several examples including that Micron Technology Inc. announced it would draw the full $2.5 billion from its credit facility, and that Aercap Holdings similarly stated it too would fully draw down a $4 billion credit facility.

In the wake of the crisis companies do not seem to care that this would normally be a red flag for investors. The article quotes a former debt capital markets banker: “Having the credit lines in place is not the same as having the cash on their books. Companies are doing what they can to ensure they have liquidity.”

crisis liquidity
Source: Serena Ng | "Another Problem for the Fed: Banks Pressured as Clients Scramble for Cash" | The Wall Street Journal | 03/16/2020 | Visit