Renegotiation Frictions and Financial Distress Resolution: Evidence from CDS Spreads

Autor:	Rafael Matta, Tomislav Ladika, Murillo Campello
Přispěvatelé:	Finance (ABS, FEB), Corporate Governance, Faculteit Economie en Bedrijfskunde
Jazyk:	angličtina
Rok vydání:	2019
Předmět:	Economics and Econometrics 050208 finance Creditor Restructuring Shadow price media_common.quotation_subject 05 social sciences Monetary economics Payment Bankruptcy Loan Accounting Debt 0502 economics and business Financial distress Business 050207 economics Finance media_common
Zdroj:	Review of Finance, 23(3), 513-556. Oxford University Press
ISSN:	1572-3097
Popis:	We study how renegotiation frictions impact distressed debt resolution and ex-ante financial contracting. We do so by exploiting an event that exogenously reduced the costs that syndicated lenders incur when renegotiating debt out of court, without affecting in-court restructuring costs (IRS Regulation TD9599). CDS contracts insure creditors against in-court bankruptcy losses and CDS spreads reflect the shadow price of bankruptcy risk. Using a triple-differences approach, we show that CDS spreads fell by record figures on the event’s announcement, with declines concentrated among distressed firms that relied most on syndicated loans. Distressed firms’ loan renegotiation rates more than doubled, as banks agreed to extend loan maturities in exchange for higher interest payments. Those firms’ access to new syndicated loans increased while associated interest markups declined.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_dedup___::fe9bba0a65c488d365905162d644818c https://dare.uva.nl/personal/pure/en/publications/renegotiation-frictions-and-financial-distress-resolution-evidence-from-cds-spreads(575e600f-9684-4c33-8a1f-bae9abdeff9b).html Zobrazit plný text záznamu Plný text ve formátu PDF Plný text ve formátu HTML
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