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Considerations Relating to Precautionary Revolver Borrowing in Today’s Turbulent Economic Environment

Client memorandum | March 13, 2020

In light of the tremendous turmoil in global markets during the last month resulting from coronavirus-related fears and the plunge in oil prices, many companies are focused on ensuring that they have sufficient liquidity to support their operations during a potentially prolonged economic downturn.

In addition to recently announced revolver upsizings by major corporate borrowers, news reports indicate that some companies have considered drawing down under existing revolving or term credit facilities and “banking” the funds to ensure that cash remains available to them. For example, according to recent Bloomberg reports, Boeing imminently intends to draw down in full a February 2020 $13 billion delayed-draw term loan facility (with commitments that ran through August 2021).

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