Large Debt Financing: Syndicated Loans versus Corporate Bonds

37 Pages Posted: 11 Mar 2009

See all articles by Yener Altunbas

Yener Altunbas

University of Wales, Bangor

Alper Kara

Brunel University London; University of Huddersfield - Business School

David Marques-Ibanez

European Central Bank (ECB)

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Date Written: March 10, 2009

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 prefer syndicated loans. In contrast, firms with larger levels of short-term debt and those perceived by markets as having more growth opportunities favour financing through corporate bonds.

Keywords: syndicated loans, corporate bonds, debt choice, the euro

JEL Classification: D40, F30, G21

Suggested Citation

Altunbas, Yener and Kara, Alper and Marques-Ibanez, David, Large Debt Financing: Syndicated Loans versus Corporate Bonds (March 10, 2009). ECB Working Paper No. 1028, Available at SSRN: https://ssrn.com/abstract=1349085 or http://dx.doi.org/10.2139/ssrn.1349085

Yener Altunbas

University of Wales, Bangor ( email )

Bangor, Wales LL57 2DG
United Kingdom

Alper Kara (Contact Author)

Brunel University London ( email )

Kingston Lane
Uxbridge, Middlesex UB8 3PH
United Kingdom

University of Huddersfield - Business School ( email )

David Marques-Ibanez

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
49 6913 44 6460 (Phone)
49 6913 44 6460 (Fax)

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