CFOs of U.S. companies stocked up on debt in the final months of 2011, pushing the volume of revolvers to five-year highs. Companies refinanced billions of dollars of looming maturities in droves and increased their credit capacity at the same time.

For all of 2011, banks issued 80% more in dollar volume of lines of credit (LOCs) compared with 2010, according to data from Thomson Reuters LPC. Volumes picked up in the second half of the year, with issuance rising 7.6% over the first half.

“In September and October, there was a rush of refinancings,” says Reuben Daniels, managing partner at EA Markets, a capital-markets advisory firm. “Those companies that could fund have funded.”

What caused the surge in borrowing was not so much concern about credit capacity, says Daniels, but uncertainty about the banking industry and the crisis in Europe. “The motivations are different this time,” he says.

With banks facing a wave of new regulation that could increase their cost of capital and force them to reduce their lending capacity, CFOs wanted to make sure they locked in credit agreements and pricing.

View entire article.