The impact of legal advisor-issuer cooperation on securitization pricing

Nodirbek Karimov; Alper Kara; Gareth Downing

doi:10.1111/fmii.12153

The impact of legal advisor-issuer cooperation on securitization pricing

Nodirbek Karimov, Alper Kara, Gareth Downing

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

Abstract

We examine the impact of cooperation between legal advisors and issuers on bank securitization pricing using 6,624 European ABS tranches issued in the European market over the period of 1998 to 2018. We find that previous cooperation is negatively related to initial yield spreads of ABS. Investors seem to attach value to previous cooperation between issuers and legal advisors and consider such transactions less risky by asking for lower yields. We observe that the magnitude of the past relationships is also of importance. Moreover, previous cooperation becomes more important as the risk of the transaction increases. This is especially noticeable when prime (AAA rated) tranches are compared to non-prime (non-AAA rated) tranches. Our results also show that the number of legal advisors in a deal does not matter for investors.

Original language	English
Pages (from-to)	167-199
Number of pages	33
Journal	Financial Markets, Institutions and Instruments
Volume	30
Issue number	5
Early online date	16 Sep 2021
DOIs	https://doi.org/10.1111/fmii.12153
Publication status	Published - 1 Dec 2021

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1111/fmii.12153Licence: CC BY-NC-ND

Cite this

@article{1959ba1c8dce42bf9039c9e23f39e950,

title = "The impact of legal advisor-issuer cooperation on securitization pricing",

abstract = "We examine the impact of cooperation between legal advisors and issuers on bank securitization pricing using 6,624 European ABS tranches issued in the European market over the period of 1998 to 2018. We find that previous cooperation is negatively related to initial yield spreads of ABS. Investors seem to attach value to previous cooperation between issuers and legal advisors and consider such transactions less risky by asking for lower yields. We observe that the magnitude of the past relationships is also of importance. Moreover, previous cooperation becomes more important as the risk of the transaction increases. This is especially noticeable when prime (AAA rated) tranches are compared to non-prime (non-AAA rated) tranches. Our results also show that the number of legal advisors in a deal does not matter for investors. ",

keywords = "securitization, legal advisors, pricing, Europe",

author = "Nodirbek Karimov and Alper Kara and Gareth Downing",

year = "2021",

month = dec,

day = "1",

doi = "10.1111/fmii.12153",

language = "English",

volume = "30",

pages = "167--199",

journal = "Financial Markets, Institutions and Instruments",

issn = "0963-8008",

publisher = "Wiley-Blackwell",

number = "5",

}

TY - JOUR

T1 - The impact of legal advisor-issuer cooperation on securitization pricing

AU - Karimov, Nodirbek

AU - Kara, Alper

AU - Downing, Gareth

PY - 2021/12/1

Y1 - 2021/12/1

N2 - We examine the impact of cooperation between legal advisors and issuers on bank securitization pricing using 6,624 European ABS tranches issued in the European market over the period of 1998 to 2018. We find that previous cooperation is negatively related to initial yield spreads of ABS. Investors seem to attach value to previous cooperation between issuers and legal advisors and consider such transactions less risky by asking for lower yields. We observe that the magnitude of the past relationships is also of importance. Moreover, previous cooperation becomes more important as the risk of the transaction increases. This is especially noticeable when prime (AAA rated) tranches are compared to non-prime (non-AAA rated) tranches. Our results also show that the number of legal advisors in a deal does not matter for investors.

AB - We examine the impact of cooperation between legal advisors and issuers on bank securitization pricing using 6,624 European ABS tranches issued in the European market over the period of 1998 to 2018. We find that previous cooperation is negatively related to initial yield spreads of ABS. Investors seem to attach value to previous cooperation between issuers and legal advisors and consider such transactions less risky by asking for lower yields. We observe that the magnitude of the past relationships is also of importance. Moreover, previous cooperation becomes more important as the risk of the transaction increases. This is especially noticeable when prime (AAA rated) tranches are compared to non-prime (non-AAA rated) tranches. Our results also show that the number of legal advisors in a deal does not matter for investors.

KW - securitization

KW - legal advisors

KW - pricing

KW - Europe

UR - http://www.scopus.com/inward/record.url?scp=85114950696&partnerID=8YFLogxK

U2 - 10.1111/fmii.12153

DO - 10.1111/fmii.12153

M3 - Article

VL - 30

SP - 167

EP - 199

JO - Financial Markets, Institutions and Instruments

JF - Financial Markets, Institutions and Instruments

SN - 0963-8008

IS - 5

ER -

The impact of legal advisor-issuer cooperation on securitization pricing

Abstract

UN SDGs

Access to Document

Other files and links

Fingerprint

Cite this