Speed of Issuance, Lender Specialization, and the Rise of the 144A Debt Market

50 Pages Posted: 1 Aug 2009 Last revised: 10 Sep 2009

See all articles by Rongbing Huang

Rongbing Huang

Kennesaw State University - Michael J. Coles College of Business

Gabriel G. Ramirez

Kennesaw State University - Michael J. Coles College of Business

Date Written: July 31, 2009

Abstract

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

Huang, Rongbing and Ramirez, Gabriel G., Speed of Issuance, Lender Specialization, and the Rise of the 144A Debt Market (July 31, 2009). Available at SSRN: https://ssrn.com/abstract=1442131 or http://dx.doi.org/10.2139/ssrn.1442131

Rongbing Huang (Contact Author)

Kennesaw State University - Michael J. Coles College of Business ( email )

560 Parliament Garden Way
Mail Drop #0403
Kennesaw, GA 30144
United States

Gabriel G. Ramirez

Kennesaw State University - Michael J. Coles College of Business ( email )

1000 Chastain Road
Kennesaw, GA 30144
United States
770-423-6181 (Phone)

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