The Impact of Lending Relationships on the Choice and Structure of Bond Underwriting Syndicates

52 Pages Posted: 31 Mar 2017 Last revised: 2 Aug 2019

See all articles by Santiago Carbo-Valverde

Santiago Carbo-Valverde

Bangor Business School; Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF)

Pedro Cuadros-Solas

Colegio Universitario de Estudios Financieros (CUNEF)

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History

Date Written: August 1, 2019

Abstract

Past bank-firm lending relationships affect the probability of choosing a bank as debt-underwriter. However, there is no evidence regarding how these relationships may influence the decision to syndicate the issuance; nor is there evidence of their effect on the syndicate formation. Using a sample of European corporate bonds from 2003–2013, we show that prior lending relationships have a significant impact on the syndication choice. Reputable banks refrain from joining a syndicate if they perceive that they are matching with less reputable counterparts. Furthermore, when lending relationships explain the syndication choice, there is a negative effect on at-issue spreads

Keywords: underwriters, banks, syndicate, bond, multiple underwritten

JEL Classification: G32, G21

Suggested Citation

Carbo-Valverde, Santiago and Cuadros-Solas, Pedro and Rodriguez-Fernandez, Francisco, The Impact of Lending Relationships on the Choice and Structure of Bond Underwriting Syndicates (August 1, 2019). Available at SSRN: https://ssrn.com/abstract=2943432 or http://dx.doi.org/10.2139/ssrn.2943432

Santiago Carbo-Valverde

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF) ( email )

Serrano Anguita 9
Madrid, Madrid 28004
Spain

Pedro Cuadros-Solas (Contact Author)

Colegio Universitario de Estudios Financieros (CUNEF)

C/ Leonardo Prieto Castro, 2, Ciudad Universitaria
Madrid, Madrid 28040
Spain

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History ( email )

Granada
Spain

Register to save articles to
your library

Register

Paper statistics

Downloads
167
Abstract Views
732
rank
178,663
PlumX Metrics