Borrow Tightness Is Often a Supply Story, Not a Demand One
Periods of tightening borrow are frequently explained as a surge in short demand. While demand does matter, this explanation often misses the more important side of the equation.
In practice, borrowing conditions deteriorate most sharply when supply changes, not when demand surges. Lenders adjust risk limits, withdraw reserves in response to corporate events, or reduce exposure to specific companies long before demand indicators reflect any changes. From the outside, this looks like sudden pressure. Inside the company, it is usually a controlled decision.
The result is a familiar pattern: borrowing rates change first, and explanations follow. Interpreting tightening without analyzing supply behavior almost always leads to incomplete conclusions.
