Large Debt Financing: Syndicated Loans Versus Corporate Bonds

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Executive Summary

Following the introduction of the euro, the markets for large debt financing experienced a historical expansion. The authors investigate the financial factors behind the issuance of syndicated loans for an extensive sample of euro area non-financial corporations. For the first time they compare these factors to those of its major competitor: the corporate bond market. They 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.

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