U.S. companies paying down maxed out credit lines with bond issues: BoA note

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An increasing number of U.S. companies are selling bonds to repay lines of credit they drew down at the height of the coronavirus-induced market turmoil, an indication that the cash crunch facing much of Corporate America may be easing, according to Bank of America analysts.

“Now we are seeing signs that some companies have confidence they can get to the other side because they are issuing corporate bonds to pay down credit lines,” Hans Mikkelsen, head of U.S. investment grade credit strategy at Bank of America, wrote in a note.

Many corners of the credit markets are booming following a string of asset purchases by the Federal Reserve and direct lending schemes set up in conjunction with the Treasury Department.

 

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