Intuition suggests that firms with higher cash holdings are safer and should have lower credit spreads. Yet empirically …, the correlation between cash and spreads is robustly positive and higher for lower credit ratings. This puzzling finding … are positively related to credit risk, resulting in a positive correlation between cash and spreads. In contrast, spreads …

We provide evidence that credit lines offer liquidity insurance to borrowers. Borrowers are able to extensively use … their credit lines in recessions and ahead of credit line cuts. In fact drawdowns and changes in drawdowns predict internal … credit rating downgrades and credit line cuts, suggesting substantial liquidity access before credit line cuts. Credit line …

and Realignment Act of 1990. Consistent with a credit supply-side view of capital structure, we find that asset … redeployability is a particularly important driver of leverage for firms that are likely to face credit frictions (e.g., small …, unrated firms). Our tests also show that asset redeployability facilitates borrowing the most during periods of tight credit …

' liquidity policies as a function of real asset reallocation, examining the trade-offs between cash and lines of credit. The … use credit lines (relative to cash) when they operate in industries in which liquidity mergers are more frequent …

cash to total assets. Firms" that have the greatest access to the capital markets (e.g. large firms and those with credit …