Graph 1 below (Source: Financial Times, March 25, 2020) provides an estimate of borrowings by companies from credit lines that are provided by their banks. Why has this occurred? What sort of liquidity risk might the banks be experiencing as a result of the borrowing undertaken by the corporations identified in the chart? If these credit lines were off-balance sheet commitments made by the banks to the borrowers would this have impacted on the Liquidity Coverage ratio of the Banks in March 2020? Graph 1 Companies have drawn at least $124bn from credit lines Borrowings made under revolving facilities since Mar 1 2020 (sbn) VF Corp Duke Energy JCPenney 2 1.3 Kraft Heinz Micron Technology 2.5 Applied Materials GM 1.5 16 Caesar 1.2 GM tapped its banks for $16bn Host in the largest Hotels funding request 1.5 Hotelier Hilton was among the first to draw Signet down its credit line Jeweler Hilton Worldwide Albertsons 1.5 Best Buy 2 1.3 Carnival 3 Marriott Aer Cap International 2.5 Norwegian Cruise Line 1.6 Lam Ford Research 15.4 Sysco 1.5 Southwest Airlines 2 Delta Airlines 3 Air France KLM 1.9 Air Canada Kohl's Ventas 2.6 AB InBev 9 TX Adient Aptiv 1.9 Expedia Brands 1.9 Westlake US Chemical Foods Like other airlines, Delta has cancelled scores of flights and is under threat of downgrades from global credit agencies Sources company filings FT research OFT Graph 1 below (Source: Financial Times, March 25, 2020) provides an estimate of borrowings by companies from credit lines that are provided by their banks. Why has this occurred? What sort of liquidity risk might the banks be experiencing as a result of the borrowing undertaken by the corporations identified in the chart? If these credit lines were off-balance sheet commitments made by the banks to the borrowers would this have impacted on the Liquidity Coverage ratio of the Banks in March 2020? Graph 1 Companies have drawn at least $124bn from credit lines Borrowings made under revolving facilities since Mar 1 2020 (sbn) VF Corp Duke Energy JCPenney 2 1.3 Kraft Heinz Micron Technology 2.5 Applied Materials GM 1.5 16 Caesar 1.2 GM tapped its banks for $16bn Host in the largest Hotels funding request 1.5 Hotelier Hilton was among the first to draw Signet down its credit line Jeweler Hilton Worldwide Albertsons 1.5 Best Buy 2 1.3 Carnival 3 Marriott Aer Cap International 2.5 Norwegian Cruise Line 1.6 Lam Ford Research 15.4 Sysco 1.5 Southwest Airlines 2 Delta Airlines 3 Air France KLM 1.9 Air Canada Kohl's Ventas 2.6 AB InBev 9 TX Adient Aptiv 1.9 Expedia Brands 1.9 Westlake US Chemical Foods Like other airlines, Delta has cancelled scores of flights and is under threat of downgrades from global credit agencies Sources company filings FT research OFT
