Debt Securities in Private Firms: Types, Institutions and Performance in 25 Countries
39 Pages Posted: 29 Sep 2011 Last revised: 24 Jan 2012
Date Written: September 27, 2011
We document the types of private debt securities used by private firms across 25 countries over 2001-2010. Returns to private debt depend on lender (fund manager) characteristics, particularly portfolio size per manager, highlighting the role of time allocation for due diligence and monitoring. Also, returns to private debt are significantly related to borrower (firm-specific) risk. By contrast, market conditions such as TED spreads and country level legal factors such as creditor rights are insignificantly or, at most, weakly related to the returns to private debt. Market and legal conditions are nevertheless significantly related to private debt investment volumes and location.
Keywords: Private debt, Contracts, Performance, Law and finance
JEL Classification: G23, G24
Suggested Citation: Suggested Citation