The Syndicate Structure of Securitized Corporate Loans

53 Pages Posted: 12 Nov 2019

See all articles by Zhengfeng Guo

Zhengfeng Guo

Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Shage Zhang

Trinity University

Date Written: November 1, 2018

Abstract

Securitized loans have lower lead bank shares but larger shares held by non-CLO institutional investors than non-securitized loans. The result can largely be explained by their degree of information asymmetry and credit risk. We find that lead banks increase their holdings after a non-securitized loan becomes securitized, but they do not reduce financial exposure to securitized facilities during the boom of the CLO market. Furthermore, we find that securitized loans do not perform differently from similar non-securitized loans. We conclude that differences in syndicate structure are likely shaped by participants’ investment preference rather than a manifestation of adverse selection.

Keywords: Securitization, Lead Bank Share, Information Asymmetry, Syndicate Structure

JEL Classification: G21, G23, G32

Suggested Citation

Guo, Zhengfeng and Zhang, Shage, The Syndicate Structure of Securitized Corporate Loans (November 1, 2018). Available at SSRN: https://ssrn.com/abstract=3479317 or http://dx.doi.org/10.2139/ssrn.3479317

Zhengfeng Guo

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street SW
Washington, DC 20219
United States

Shage Zhang (Contact Author)

Trinity University ( email )

San Antonio, TX 78212
United States

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