Large Debt Financing: Syndicated Loans Versus Corporate Bonds

Yener Altunbas, Alper Kara, David Marques-Ibanez

Research output: Contribution to journalArticle

17 Citations (Scopus)

Abstract

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.
Original languageEnglish
Pages (from-to)437-458
Number of pages22
JournalEuropean Journal of Finance
Volume16
Issue number5
Early online date20 Oct 2009
DOIs
Publication statusPublished - 2010
Externally publishedYes

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