TY - JOUR
T1 - Large Debt Financing
T2 - Syndicated Loans Versus Corporate Bonds
AU - Altunbas, Yener
AU - Kara, Alper
AU - Marques-Ibanez, David
PY - 2010
Y1 - 2010
N2 - Following the introduction of the euro, the markets for large debt financing experienced a historical expansion. We investigate the financial factors behind the issuance of syndicated loans for an extensive sample of euro area non-financial corporations. For the first time, we compare these factors to those of its major competitor: the corporate bond market. We find that large firms, with greater financial leverage, more (verifiable) profits and higher liquidation values tend to choose syndicated loans. In contrast, firms with more short-term debt and those perceived by markets as having more growth opportunities favour financing through corporate bonds. Syndicated loans are the preferred instrument at the extreme where firms are very large, profitable but have less growth opportunities.
AB - Following the introduction of the euro, the markets for large debt financing experienced a historical expansion. We investigate the financial factors behind the issuance of syndicated loans for an extensive sample of euro area non-financial corporations. For the first time, we compare these factors to those of its major competitor: the corporate bond market. We find that large firms, with greater financial leverage, more (verifiable) profits and higher liquidation values tend to choose syndicated loans. In contrast, firms with more short-term debt and those perceived by markets as having more growth opportunities favour financing through corporate bonds. Syndicated loans are the preferred instrument at the extreme where firms are very large, profitable but have less growth opportunities.
KW - Syndicated loans
KW - Corporate bonds
KW - Debt choice
KW - The Euro area
UR - http://www.tandfonline.com/toc/rejf20/current
U2 - 10.1080/13518470903314394
DO - 10.1080/13518470903314394
M3 - Article
VL - 16
SP - 437
EP - 458
JO - European Journal of Finance
JF - European Journal of Finance
SN - 1351-847X
IS - 5
ER -