Are syndicated loans truly less expensive?

Cortés, Janko Hernández; Tribó, Josep A.; Adamuz, María de las Mercedes

doi:10.1016/j.jbankfin.2020.105942

Cited by 2 publications

(2 citation statements)

References 33 publications

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“…The company's profitability has a significant negative effect at a significance level of 10% on syndicated loan spreads. The results of this study are also supported by the research of Cortés et al [24], Champagne and Kryzanowski [9], and Houston et al [15]. The higher the company's level of profitability, the greater the ability of the debtor to fulfill its obligations and pay back its debts.…”

Section: Resultssupporting

confidence: 83%

“…It can be said that the effort to reduce information asymmetry by involving more creditors to enhance monitoring activities toward debtors from public companies in Indonesia, Thailand, and Vietnam has not been successful. This finding is supported by Cortés et al [24]. As the number of syndicated loan participants' increases, lead arranger monitoring will be suboptimal as their exposure decreases.…”

Section: Resultsmentioning

confidence: 54%

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Factors Affecting Syndicated Loan Spreads in Indonesia, Thailand, and Vietnam

Bryan¹,

Marciano²,

Ernawati³

et al. 2022

Advances in Economics, Business and Management Research

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This study aims to analyze the effect of loan information (i.e., number of lenders, loan amount, and loan maturity) and borrower characteristics (i.e., public, firm size, leverage, and profitability), as well as control variables such as country and year on syndicated loan, spread in public companies and private companies in Indonesia, Thailand, and Vietnam during the 2008–2018 period by calculating the All In Spread Drawn (AISD) of the syndicated loans over LIBOR. This study applied a quantitative approach through the ordinary least squares method on a sample of 389 observations. A total of 118 observations came from public companies, and 271 observations came from private companies. This study shows that syndicated loans given to private companies are more expensive than public companies. However, this can be minimized by increasing the loan exposure for private firms through a larger number of lenders. It can also be seen that public companies with larger assets, higher returns on equity, and borrowing with shorter terms will be subject to lower interest rates. The spreads for syndicated loans are the most expensive in Indonesia, followed by Vietnam and Thailand.

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Section: Resultssupporting

confidence: 83%

Section: Resultsmentioning

confidence: 54%

Factors Affecting Syndicated Loan Spreads in Indonesia, Thailand, and Vietnam

Bryan¹,

Marciano²,

Ernawati³

et al. 2022

Advances in Economics, Business and Management Research

View full text Add to dashboard Cite

show abstract

B: Financial Instruments and Markets

2021

World Banking Abstracts

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More than ten per cent of all syndicated loans issued to corporate borrowers between 1980 and 2010 involved co-lending by private-and public-sector lenders. A commonly cited justification for co-lending is that it subjects government-owned lenders to market discipline but this paper casts doubt on such claims. Mixed syndicates of private-and government-owned lenders are more inclined than private syndicates to issue loans to companies with government connections. What is more, loans issued by mixed syndicates typically have less collateral, longer maturities, fewer covenants and lower spreads. If the borrowing company has political connections, it will benefit from more favourable terms. Crucially, companies that receive loans from mixed syndicates subsequently underperform in terms of profitability and valuation, thereby indicating that these loans are not allocated efficiently. (9 tables, references) 1284/37 Till mortgage do us part: mortgage switching costs and household's bank switching Brunetti, M. et al.

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Are syndicated loans truly less expensive?

Cited by 2 publications

References 33 publications

Factors Affecting Syndicated Loan Spreads in Indonesia, Thailand, and Vietnam

Factors Affecting Syndicated Loan Spreads in Indonesia, Thailand, and Vietnam

B: Financial Instruments and Markets

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