Concentration of control rights in leveraged loan syndicates
| Autor: | Mitchell Berlin, Greg Nini, Edison Yu |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
040101 forestry
Economics and Econometrics 050208 finance Cross-collateralization Strategy and Management 05 social sciences Control (management) Financial system 04 agricultural and veterinary sciences Installment credit Exclusive right Loan Term loan Accounting Revolving Loan Fund Line of credit 0502 economics and business Financial crisis Economics 0401 agriculture forestry and fisheries Credit crunch Business Non-conforming loan Finance |
| Zdroj: | Journal of Financial Economics. 137:249-271 |
| ISSN: | 0304-405X |
| DOI: | 10.1016/j.jfineco.2020.02.002 |
| Popis: | We find that corporate loan contracts frequently concentrate control rights with a subset of lenders. Despite the rise in term loans without financial covenants—so-called covenant-lite loans—borrowing firms’ revolving lines of credit almost always retain traditional financial covenants. This split structure gives revolving lenders the exclusive right and ability to monitor and to renegotiate the financial covenants, and we confirm that loans with split control rights are still subject to the discipline of financial covenants. We provide evidence that split control rights are designed to mitigate bargaining frictions that have arisen with the entry of nonbank lenders and became apparent during the financial crisis. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|
Full Text from ScienceDirect