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Large debt financing: syndicated loans versus corporate bonds

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  • Altunbas, Yener
  • Kara, Alper
  • Marqués-Ibáñez, David

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. JEL Classification: D40, F30, G21

Suggested Citation

  • Altunbas, Yener & Kara, Alper & Marqués-Ibáñez, David, 2009. "Large debt financing: syndicated loans versus corporate bonds," Working Paper Series 1028, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20091028
    Note: 328790
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    More about this item

    Keywords

    corporate bonds; debt choice; syndicated loans; the euro;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • F30 - International Economics - - International Finance - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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