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Large debt financing: syndicated loans versus corporate bonds

  • Yener Altunbas
  • Alper Kara
  • David Marques-Ibanez

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.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/13518470903314394
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Article provided by Taylor & Francis Journals in its journal The European Journal of Finance.

Volume (Year): 16 (2010)
Issue (Month): 5 ()
Pages: 437-458

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Handle: RePEc:taf:eurjfi:v:16:y:2010:i:5:p:437-458
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