Speed of Issuance, Lender Specialization, and the Rise of the 144A Debt Market
50 Pages Posted: 1 Aug 2009 Last revised: 10 Sep 2009
Date Written: July 31, 2009
Using a large sample of convertible and straight debt issues in the public, 144A, and bank loan markets from 1991-2004, we find that the 144A market has risen largely at the expense of the non-shelf public market, the overwhelming majority of the 144A issues are subsequently registered, and straight debt issuers with the highest credit quality and transparency tend to use the shelf public market. Our findings suggest that firms’ preference for speed of issuance drives the growth of the 144A market, and banks and qualified institutional buyers have advantages over public lenders in handling credit risk and information asymmetry.
Keywords: Speed of issuance, lender specialization, credit rating, credit quality, information asymmetry, 144A, Rule 144A, shelf registration, convertible, straight debt, bank loan, investment grade, junk bond, security choice, market choice, debt markets, debt issuance, Dealscan, PlacementTracker
JEL Classification: G24
Suggested Citation: Suggested Citation