Fiat Chrysler Automobiles is tapping into more of its available credit as the global financial impact from the coronavirus spreads and puts pressure on companies to make sure they have plenty of funding.
The company, in a news release Tuesday evening, said that "in light of the continuing uncertainty relating to the impacts of COVID-19, it has drawn down" a now-$6.8 billion (6.25 billion euros) revolving credit facility, which was originally signed in June 2015. That's in addition to $1.6 billion (1.5 billion euros) the company had already started to draw down.
Those amounts are in addition to FCA's announcement less than a month ago that it had secured almost $3.8 billion (3.5 billion euros) in additional credit.
In a recent news release, the company said the additional credit "confirms the strong support that FCA continues to enjoy from its relationship banks and supports FCA's continued access to international capital markets in the current extraordinary circumstances."
Despite the optimistic tone of such announcements, the actions indicate changes afoot in global financial markets as companies try to make sure they have enough money available to weather the coronavirus storm. Vehicle sales are down, and Ford, in a possible preview of what's to come for others, already announced that it lost about $2 billion in the first quarter of the year.
Ford had said it has enough cash to get through the third quarter without significant adjustments. However, the company was moving to borrow substantial amounts of money to provide a cushion.
Erik Gordon, a law professor at the University of Michigan's Ross School of Business, called recent activity like Ford's "a reaction to (COVID-19) by people who remember what happened in the financial crisis when the most credit-worthy companies in the country literally couldn't borrow 10 cents."
