The tally of U.S. corporate entities drawing upon existing revolving credit lines since March 5 grew by $14.8 billion yesterday as companies continue efforts to shore up liquidity amid the coronavirus crisis.
The RC drawdown total since March 5 — when LCD began tracking this info — is now $175.4 billion, via approximately 281 credit facilities. Historically, these RC lines could go largely undrawn, and might be used for working capital, as a backup line of credit, or for corporate cash emergencies.
Many of these debt issuers have cited in SEC filings the coronavirus as the reason for tapping these lines, along with an "abundance of caution."
The Consumer Discretionary sector continues to comprise the bulk of the RC drawdowns, with more than half the $175 billion coming via that sector.
Drilling deeper into that segment, automakers continue to dominate — thanks largely to General Motors Co., though Hotels and Cruise Lines entities also have been tapping revolving credits. These issuers include Hilton Grand Vacations, Wyndham Destinations, Norwegian Cruise Line Holdings Ltd. and Carnival Corporation & PLC.
While the bulk of loan issuers drawing on RCs since March 5 are investment grade, lower-rated entities — those at single-B, triple-C and unrated — make up 19% of the activity (by volume).
Most of the RCs being drawn down, in the leveraged segment of the market at least, mature in 2023-24.
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