The Syndicate Structure of Securitized Corporate Loans

29 Pages Posted: 20 May 2020

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

Multiple version iconThere are 2 versions of this paper

Date Written: February 2020

Abstract

Securitized loans have lower lead bank shares, but larger shares held by non‐CLO (collateralized loan obligation) institutional investors than nonsecuritized 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 nonsecuritized 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 nonsecuritized loans. We conclude that differences in syndicate structure are likely shaped by participants’ investment preference rather than a manifestation of adverse selection.

Keywords: information asymmetry, lead bank share, securitization, syndicate structure

JEL Classification: G21, G23, G32

Suggested Citation

Guo, Zhengfeng and Zhang, Shage, The Syndicate Structure of Securitized Corporate Loans (February 2020). Financial Review, Vol. 55, Issue 1, pp. 61-89, 2020, Available at SSRN: https://ssrn.com/abstract=3601154 or http://dx.doi.org/10.1111/fire.12203

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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