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Credit facilities

Back-up borrowing lines, commercial paper and covenants, with the facilities Walmart and Home Depot describe in their 10-Ks.

The short answer

A credit facility is a committed borrowing line a company can draw when it needs cash, usually from a group of banks. Many large companies also run a commercial paper program (short-term IOUs sold to investors) and keep unused facilities in place as back-up so that if the commercial-paper market is unwilling, the banks are still on the hook. The 10-K's debt note reports the size, how much is drawn, when the line expires, and the covenants attached to it.

Facilities, commercial paper and back-up lines

A revolving credit facility is a committed line the company can draw, repay and draw again during its term, a bit like a corporate credit card with a set limit and a maturity date. A 364-day facility is rewritten each year; a five-year facility lasts longer.
Commercial paper is short-term unsecured debt sold in the market, often cheaper than drawing the bank line. The 10-K usually states the program size and the amount outstanding.
Back-up facilities sit behind the commercial-paper program. The company may show little or nothing drawn on the bank lines even when commercial paper is outstanding, because the lines are there in case the paper cannot be refinanced.

Interest on a facility is typically a floating rate, often described as SOFR plus a margin, plus a small commitment fee on the unused amount. None of this is the same as long-term bonds, which are a fixed borrowing already outstanding. Net debt and interest coverage include the amounts that have actually been borrowed; an undrawn line is capacity, not debt, until it is drawn.

Walmart and Home Depot

Walmart's fiscal 2026 10-K lists a five-year credit facility of $5,000 million and a 364-day revolving credit facility of $10,000 million as of January 31, 2026, both undrawn, and says that in conjunction with those committed lines the company has agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt.

Home Depot's fiscal 2025 10-K describes a similar structure. In May 2025 it terminated three back-up credit facility agreements and simultaneously entered into a new five-year $3.5 billion credit facility scheduled to expire in May 2030 and a new 364-day $3.5 billion facility. The 10-K also states that the company was in compliance with all of the covenants in its back-up credit facilities.

Covenants

Covenants are promises in the facility agreement or in a bond indenture. Some limit additional secured borrowing, as in Walmart's case; some require a minimum interest-coverage or leverage ratio; some require the company to keep filing periodic reports. A breach can let lenders demand repayment or block further draws. The 10-K typically says whether the company was in compliance at year end, without reprinting the full contract. Credit ratings are a separate opinion from the credit-rating agencies, not a covenant, though a downgrade can raise the margin on a facility if the contract says so.

Common questions

What is a revolving credit facility?

A committed bank line a company can draw, repay and draw again during its term, up to a stated limit, usually for a fee on the unused portion and interest on any amount drawn.

Why keep a facility if it is undrawn?

It is a source of liquidity if the company needs cash, and often a back-up for a commercial-paper program. An undrawn line is capacity, not outstanding debt.

What is commercial paper?

Short-term unsecured notes sold to investors. Companies use it as everyday short-term funding and keep bank facilities behind it as a back-up.

What is a covenant?

A promise in the loan or indenture, such as a cap on secured debt or a required financial ratio. Breaking it can restrict further borrowing or allow lenders to demand repayment.

Where are these disclosed?

In the liquidity discussion of MD&A and in the debt note to the financial statements, which usually show the size, the amount drawn, the maturity and whether the company was in compliance with the covenants.

Disclosures

Editor holdings: The editor holds no position in any company named on this page. As of Nov 11, 2026.
Compensation: Nobody paid for this page. No affiliate links on this page.
Sources: Each company's own SEC filings, linked next to each number.
Last updated: Nov 10, 2026

General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.

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