Malherbe, F;
Bruche, M;
Meisenzahl, R;
(2020)
Pipeline Risk in Leveraged Loan Syndication.
The Review of Financial Studies
, Article hhaa029. 10.1093/rfs/hhaa029.
(In press).
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Abstract
What is the economic role played by arrangers of leveraged loans, and what are the risks they face? We provide evidence that arrangers solve a demand discovery problem. Investors have incentives to feign little interest in the loan to obtain better terms. To deter such behavior, arrangers underprice hot deals and ration investors on cold deals. The risk associated with demand discovery is often shared between borrowers and arrangers. One implication is that to ration investors on cold deals, arrangers retain larger loan shares. This motive for retention is different from the monitoring incentive motive previously considered in the literature.
| Type: | Article |
|---|---|
| Title: | Pipeline Risk in Leveraged Loan Syndication |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1093/rfs/hhaa029 |
| Publisher version: | https://doi.org/10.1093/rfs/hhaa029 |
| Language: | English |
| Additional information: | © The Author 2020. Published by Oxford University Press on behalf of The Society for Financial Studies. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. |
| Keywords: | G23 - Non-bank Financial Institutions; Financial Instruments; Institutional InvestorsG24 - Investment Banking; Venture Capital; Brokerage; Ratings and Ratings AgenciesG30 - General |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10087969 |
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