Credit Lines Tend to Contract at the Most Inopportune Timesby Sean Hannon
I have warned in the past that both corporate and individual borrowers often view available credit as cash on hand. As consumers have seen their ability to borrow curtailed, many have changed their view. Unfortunately, corporate borrowers have not. American Express (AXP) highlights a credit facility that allows them to sell $5 billion of credit card receivables as a key component of their liquidity strategy. As we have learned before, and most likely will relearn many times again, credit-reliant borrowers often see needed credit disappear at the worst possible time. Many companies have yet to absorb this lesson.