SYNDICATED LOANS
胡适故居Steven A. Dennis
California State University at Fullerton
Donald J. Mullineaux一无所有造句
University of Kentucky
Abstract
句子成分pptThis paper analyzes the market for syndicated loans, a hybrid of private and public debt, which has grown at well over a 20 percent rate annually over the last decade and totaled over $1 trillion in 1997. While loan sales have been heavily rearched, there has been little work on syndications, which differ in character from sales. We prent empirical evidence that the extent to which a loan can be syndicated increas as information about the borrower becomes more transparent, as the syndicate’s managing agent becomes more “reputable,” as the loan’s maturity increas, and as the loan lacks collateral. The lead manager holds larger proportions of information-problematic loans in its own portfolio. Loan syndications, like loan sales, appear to be motivated, in part, by capital regulations, but t
he liquidity position of the agent bank does not influence its syndication behavior. Activity in the syndication market is broadly consistent with Diamond’s (1991) “life-cycle” model of borrower choice, but our results also support the view that contract characteristics and reputation can rve as “substitutes” for information in the debt market.
KEY WORDS: LOAN SYNDICATIONS, BANKING, AGENCY COSTS,
REPUTATION
Contact:
Donald J. Mullineaux
Gatton College of Business and Economics
University of Kentucky
Lexington, KY 40506-0034
Phone: (606) 257-2890
Fax: (606) 257-9688
E-mail: mullinea@pop.uky.edu
Syndicated Loans
A significant literature has emerged in recent years on the topic of borrower choice between private and public debt. A connsus view suggests that a critical factor driving the choice is the character and quality of the information available about the borrower. Diamond (1991) develops a formal model which involves borrowers shifting from private sources (financial intermediaries such as banks and insurance companies) to the public markets (commercial paper and bonds) as the quality of the information about the firm improves and the borrower develops a “reputation” in the form of a history of successful debt repayments. Carey, Prow, Rea and Udell (CPRU, 1993) propo an extended continuum, with firms gravitating from insider finance, through venture capital, bank loan finance, private placements, and the public debt markets as information and collateral become increasingly available and the borrower’s repayment “track record” improves. As borrowers become less “information problematic,” the characteristics of the lenders and the underlying debt contracts vary systematically. Bank loans tend to be relatively short term, involve extensive covenants, and are fre
quently re-negotiated. The majority of public-debt contracts are longer term, involve relatively loo covenants, and are almost never restructured. The contractual characteristics have been extensively examined and rationalized in the literature in papers such as Berlin and Loeys (1988), Berlin and Mester (1992), and Rajan and Winton (1995).
As CPRU note, some borrowing techniques and their associated contracts involve overlap between the public and private markets. They focus primarily on
private placements, which involve lenders who are intermediaries (typically insurance companies) and contracts that have relatively strict covenants and reasonably frequent restructuring, which are all characteristics of private debt. Like public debt, however, private placements are issued in large amounts by sizable firms at fixed interest rates, and sales of the debt claims to investors normally are facilitated by investment banks or commercial bank holding company affiliates.1 In addition, James (1987) finds that announcing private placement financing has no effect on the equity returns to the borrowing firm, whereas loan announcements have a significantly positive impact.
盂兰盆节Still another type of financing that involves characteristics of both public and private debt is syndicated loans. Syndication involves the sale of a relatively large commercial loan in “parcels” to a
group of institutional buyers, whereas a private placement typically is the sale of a “whole” debt contract to a single lender (although some private placements involve a relatively small group of lenders).
In principle, any loan could be syndicated by any financial institution that acts as a loan originator. In practice, only certain kinds of loans and certain types of institutions engage in syndications. This paper identifies the factors that influence a loan’s syndication potential. Our maintained hypothesis is that the characteristics of the borrower, of the lender, and the loan contract itlf can play some role. By sorting out the influences empirically, we hope to: (1) provide further evidence on the significance of information problems and mechanisms for resolving them in financial contracting and (2) specify where syndicated loans “fit”on the private/public debt continuum.
An analysis of syndicated loans also may provide indirect evidence concerning the role of relationships in financial arrangements. Recent papers by Berger and Udell (1995), Petern and Rajan (1994), and Cole (1998) provide evidence that an ongoing relationship between a borrower and financing agent can rve as a mechanism for attenuating agency and information problems. When borrowers ek multiple loans from the same bank over time, a repayment history accumulates and the lender forms a more extensive and dynamic information t bad on multiple
介绍一个人asssments of financial statements, discussions with managements, and possible renegotiations. When lending is complemented with the provision of deposit, cash-management and operations-bad (e.g., payroll) rvices, the information t becomes still broader and deeper. Berger and Udell (1995) find that interest rates and collateral requirements on lines of credit decline with the length of a bank-borrower relationship, while Petern and Rajan (1994) provide evidence that dependence on trade credit decreas with the length of a relationship. Cole (1998) finds that the probability a small business will receive credit increas in the prence of a relationship, especially if the borrower obtained multiple rvices in that context.
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When lenders provide funds to borrowers in the context of a syndicated loan, the elements that facilitate establishing and deepening a relationship are less likely to be prent. While the lead bank may have some form of relationship with the borrower, this is less likely to be the ca for participating members. Since the buyer of the syndicated loan cannot rely on relationships with the borrower as a substitute for other mechanisms that resolve agency
好四字词语problems, evidence that certain loan contract characteristics play a different role in a syndication context relative to a relationship tting would confirm the relevance of relationships as a factor for resolving information problems.
Section I of this paper provides an overview of the loan syndication market. Section II specifies a model that identifies the various factors which affect the syndication potential of individual commercial loans. Section III provides estimates of the model and interprets the results. Section IV provides some conclusions.
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I. Overview of the Loan Syndication Market
Syndicating loans is a centuries old process that has shown significant growth in the 1990’s. Gold Sheets Annual, a publication of Loan Pricing Corporation, reports that loan syndication volume hit a record high $888 billion in 1996 compared to $137 billion in 1987, a compound annual growth rate of roughly 23 percent.2 In 1997, loan syndications exceeded $1 trillion for the year as a whole, compared to roughly $300 million of private placements. Syndicated financings in 1996 were employed largely for general corporate purpos (49.5 percent) and for debt repayment (33.5 percent), which reprents a considerable shift from the late 1980’s when syndicated loans were ud primarily to finance mergers and acquisitions and leveraged buyout activities. The rapid growth in volume has been accompanied by declining spreads and fees. In 1996, the average rate spread over LIBOR on BB credits averaged 71 basis points,
